1951-04-26

CONFERENCES


Mr. George A. Drew (Leader of the Opposition):: Mr. Speaker, I rise on a question of privilege. Yesterday during the debate on the budget I raised certain points with regard to Canadian representation at a number of conferences; and as reported at page 2373 of Hansard I said:
But I wonder how important to the government and the people of Canada was a conference described as the international congress of chocolate and cocoa manufacturers which was held at Lausanne last year.
Then further on I said:
And I do not know that we have heard anything of what was gained by our attendance at the international congress of psychiatrists at Paris, or the meeting of the directing council and sanitary conference of the Pan-American bureau of Ciudad Trujillo.
Later I referred to the Washington conference of the society of vertebrate palaeontology and the palaeontological society. At that point I noticed that the Secretary of State for External Affairs (Mr. Pearson) was about to rise, and I mentioned that fact. Then, as reported in Hansard, the Secretary of State for External Affairs said:
I was just going to say there were no delegations at those conferences.
It is possible that there is some distinction in the use of words which is in the mind of the Secretary of State for External Affairs, but certainly the thought conveyed to my mind, and I know to others, was that this statement was incorrect as to the fact that Canada had attended those conferences. I therefore should like to refer to the report of the Department of External Affairs for the year 1950, issued over the signature of the Secretary of State for External Affairs. At pages 82 and 83 I find that Canada was represented, according to the official statement of the department, at the conferences which I have just mentioned.


Hon. L. B. Pearson (Secretary of State for External Affairs):: Mr. Speaker, if I may, I
should like to add a word on the question of privilege raised by the hon. gentleman. If my intervention yesterday gave the impression, as it might well have done, that there 80709-1534
was no Canadian representation of any kind at these conferences, I was entirely wrong, and I apologize to the hon. gentleman and to the house for giving that impression. It is quite true that, with regard to these four conferences, there were individual Canadian observers at two of them and individual Canadian representatives from departments of government at the other two. In that sense, Mr. Speaker, Canada was represented at those four meetings; and I am extremely sorry to have given the wrong impression by my intervention yesterday.



COMMITTEES OF THE HOUSE


Mr. W. G. Weir (Portage-Neepawa) moved:: That the name of Mr. Macdonnell (Greenwood) be substituted for that of Mr. White (Hastings-Peterborough) on. the standing committee on public accounts.
That the name of Mr. Richard (Gloucester) be substituted for that of Mr. Langlois (Gaspe) on the special committee on veterans affairs.
That the name of Mr. Weaver be substituted for that of Mr. Maybank on the standing committee on public accounts.


[Stage Direction]
Motion agreed to.

[Stage Direction]
(Questions answered orally are indicated: by an asterisk.)

Mr. Thatcher:: 1.	During the past two years, have Mr. Peter Wilk or Mr. Richard K. Lehman acquired land in the Duck Lake Indian reserve?
2.	If so, has either gentleman a joint lease with any other person?
3.	If so, what is the name of the other person?


Mr. Harris (Grey-Bruce):: 1.	Yes.
2.	Yes.
3.	On July 6, 1950, a crop share lease on the usual terms was issued in favour of Messrs. R. K. Lehman and W. A. Tucker covering 320 acres of land in the Okemasis and Beardy's Indian reserves.


H.M.C.S. &quot;CORNWALLIS&quot;    CONTRACTS FOR REPAIRS, ETC.
Mr. Balcom:: 1.	What firms were awarded contracts, and what was the amount of each contract, during 1950-51

Questions
for (a) new construction and repairs; (b) catering; (c) supplies for H.M.C.S. Cornwallis?
2.	Were tenders called in each instance?
3.	If so, who submitted tenders, and what was the amount of each tender?


Mr. Mcllrailh:: Mr. Speaker, to obtain the information asked in part 1 (c) in the three questions which appear on the order paper as Nos. 4, 5 and 6, would require detailed examination of something over 12,000 files. I presume it is not the wish of the hon. member asking the question, or of the house generally, that this work be undertaken. I propose therefore to answer the three questions subject to this reservation, anid I would ask that with the reservation the questions be declared answered..


Mr. Speaker:: Questions 4, 5 and 6, asked by the hon. member for Halifax (Mr. Balcom), are answered, subject to the reservation made by the parliamentary assistant.


George James McIlraith: Then, the answer to the first question, No. 4, is as follows-and the answers to the other two are subject to the same reservation:
1.	(a) New construction: Annapolis Valley Construction Ltd., Truro, N.S., $409,822.00; Repairs: Dominion Atlantic Railway, Kent-ville, N.S., $627.00; Walker & Hall Ltd., Halifax, N.S., $29,141.00. (b) Catering: Commercial Caterers Ltd., Toronto, Ont., $141,218.50 (estimated).
2.	Answered by No. 3.
3.	New Construction:	Annapolis Valley
Construction Ltd., Truro, N.S., $409,822.00; Kenney Construction Co., Yarmouth, N.S., $485,700.00; Acadia Construction Co., Bridgewater, N.S., $554,000.00.
Repairs: The contract placed with Dominion Atlantic Railway was on a negotiated basis as they were the owners of the railway siding which' underwent repairs.
Walker & Hall, Ltd., Halifax, N.S., $29,141.00; Clare Shipbuilding Co. Limited, Montreal, P.Q., $32,060.00; J. Harold Stephens, Annapolis Royal, N.S., $34,224.00; J. S. Parker, Saint John, N.B., $57,000.00; Standard Construction Co. Ltd., Halifax, N.S., $65,648.00.
Catering: The contract with Commercial Caterers Ltd., Toronto, Ont. was originally placed in 1949 on a competitive tender and has since been renewed annually, on a negotiated basis at a reduced price.


R.C.A.F. HEADQUARTERS, GREENWOOD, N.S.   CONTRACTS FOR CONSTRUCTION, REPAIRS, ETC.
Mr. Balcom:: 1.	What firms were awarded contracts, and what was the amount of each contract, during 1950-51 for (a) new construction and repairs; (b) catering; (c) supplies for the R.C.A.F. headquarters at Greenwood, Nova Scotia?
2.	Were tenders called in each instance?
3.	If so, who submitted tenders and what was the amount of each tender?


Mr. Mcllrailh:: 1.	(a) New construction Maritime Telegraph and Telephone Company, Halifax,
N.S. Estimated expenditures $ 19,132.38 Modern Construction Ltd.,
Moncton, N.B	 178,985.00
Repairs
Acadian Construction Co. Ltd.,
Bridgewater, N.S	$	4,710.00
Rodney Construction Ltd., Yarmouth, N.S	 35,960.00
Dominion Atlantic Railway,
Kentville, N.S	 3,346.00
Babine & Taylor, Yarmouth,
N.S	 37,866.00
(b) Catering None.
2.	Answered by No. 3.
3.	New construction
The contract with Maritime Telegraph and Telephone Company was negotiated.
Modern Construction Co., Ltd.,
Moncton, N.B	$ 178,985.00
Rodney Contractors Ltd., Yarmouth, N.S	 189,685.35
Eastern Woodworkers, Ltd.,
New Glasgow, N.S	 194,969.00
Kenney Construction Co., Ltd.,
Yarmouth, N.S	 195,000.00
Foundation (Mar.) Ltd., Hali-,
fax, N.S	 199,574.00
Terminal Construction Co.,
Ltd., Dartmouth, N.S	 210,000.00
Repairs
Acadia Construction Co., Ltd. $	4,710.00
Terminal Construction Co.
Ltd., Montreal P.Q	 9,200.00
Construction Equipment Co.
Ltd., Halifax, N.S	 10,960.00
or 9,240.00
Rodney Construction Ltd. ... $	35,960.00
Killan Noah, Yarmouth, N.S. 42,800.00 Jas. S. Surette, Eel Brook,
N.S	 45,000.00
Nova Scotia Waterproofers,
Halifax, N.S	 56,700.00
The contract placed with Dominion Atlantic Railway was on a negotiated basis as they were the owners of the railway siding which underwent repairs.
Babine & Taylor, Yarmouth,
N.S	$ 37,866.80
Terminal Construction Co.,
Ltd., Moncton, N.B	 49,500.00
Rodney Contractors Ltd., Yarmouth, N.S	 49,800.00
Kenney Construction Co. Ltd.,
Yarmouth, N.S	Cost plus a fixed
fee of $3,000.00

Questions
officers training corps-allocations to the next academic year the authorized quotas universities	for each university will be subject to review.


Mr. Pearkes:: 1.	Are quotas, in so far as the number of students who may join a contingent of the C.O.T.C., allocated to Canadian universities?
2.	If so, what quotas were allocated to the various universities during 1950?
3.	To what extent were these quotas filled?


Mr. Blanchette:: 1. Yes, to universities which have authorized university contingents of Canadian Officers Training Corps.
2 and 3.
Quota Quota University Contingent Allotted Filled
Acadia university 	
Dalhousie and King's	39	39universities	
Memorial university of	103	100Newfoundland	
Mount Allison university	23	24(includes St. Joseph's) .... Nova Scotia Technical	40	40college 	18	16New Brunswick university ..	41	39St. Anne's college	5	5St. Dunstan's college	
St. Francis Xavier	15	15university 	
University of St. Mary's	34	44college 	21	22St. Thomas university	17	17Laval university	128	130Loyola college	33	54McGill university 	127	160University of Montreal	177	146Carleton college 	35	36McMaster university 	40	60Ontario Agricultural college	34	20Ottawa university 	48	55Queen's university	86	76University of Toronto	
University of Western	283	238Ontario 	83	71University of Manitoba	170	149University of Saskatchewan	146	143University of Alberta 	
University of British	105	103Columbia 	169	184Royal Military college	136	138Royal Roads 	47	47Sir George Williams 	28	28Totals	2231	2199
Note: As the grand total of the number of cadets enrolled is within the allotted quota, a few universities have been allowed to enrol beyond their authorized quotas. Before


ARMY HEADQUARTERS, ALDERSHOT, N.S.   CONTRACTS FOR CONSTRUCTION, REPAIRS, ETC.
Mr. Balcom:: 1.	What firms were awarded contracts, and what was the amount of each contract during 1950-51 for (a) new construction and repairs; (b) catering; (c) supplies, for the army headquarters at Aider-shot, Nova Scotia?
2.	Were tenders called in each instance?
3.	If so, who submitted tenders, and what was the amount of each tender?


Mr. Mcllrailh:: 1. (a) New construction, none.
Repairs
H. B. Mitchell, Wolfville, N.S. $ 9,033.00 (b) Catering
Commercial Caterers Ltd.,
Toronto, Ont	 $22,660.35
3. Repairs
H. B. Mitchell, Wolfville, N.S. . .	$ 9,033.00
Powers Bros. Limited, Lunenburg,
N.S	 9,461.00
J. V. MacPherson Limited,
Halifax, N.S	 10,568.00
Hagen & Company, Halifax, N.S. 13,402.00 Catering
Commercial Caterers Ltd.,
Toronto, Ont	 $22,660.35
Canada Catering Co. Ltd.,
Toronto, Ont	 23,543.29
Hubbert's Food Services,
Toronto, Ont	 30,736.55
Dominion Catering Co. Ltd.
Toronto, Ont	 30,781.29
Maritime Caterers Ltd.,
Digby, N.S	 38,191.04


VESSEL &quot;LAHAVE&quot;
Mr. Nowlan:: 1.	Has the government of Canada, or any corporation or agency on its behalf, purchased from A. S. Publicover, of LaHave, Lunenburg county, Nova Scotia, a boat formerly known as LaHave?
2.	If so, for what purposes was the said boat bought, and what was the amount paid therefor?


Mr. Blanchette:: 1.	Yes.
2.	Oceanographic and hydrographic research, for $60,000.


QUESTION PASSED AS ORDER FOR RETURN
Mr. Harkness:: 1. What was the original estimate of the total cost of the new government printing bureau in Hull, Quebec?

Inquiries of the Ministry
2.	What is the present estimate of what the total cost will be?
3.	How much was paid for the site on which the building is being erected?
4.	What is the size of the building?
5.	Was any amount included in the estimate to prevent a flooding of the site and building?
6.	What means are planned to prevent flooding?
7.	What will be the cost of this flood prevention?
8.	What is the cost, or estimated cost, of present operations to clear water from the foundations?
9.	How much money has been appropriated for the building?
10.	What is the present estimated total cost of the building to be?
11.	What departments will it accommodate?
12.	Will the new building house all of the departments presently scattered about Ottawa?
13.	What new equipment will be purchased for the composing room, press room, bindery, and other mechanical departments?
14.	What is the estimated cost of all new equipment?
15.	What will be the volume of printing turned out by the new bureau as compared with the present volume turned out by existing accommodation and equipment?
16.	What amount does the government hope to save by the bureau expansion?
17.	How do bureau printing costs compare with prices charged by competitive private plants?
18.	At the present time, (a) how much printing is going outside of the bureau to commercial printers; (b) what are the dollar amounts of this, by provinces?


REQUEST FOR STATEMENT AS TO FLOOR PRICE
[Stage Direction]
On the orders of the day:
Mr. G. A. Cruickshank (Fraser Valley):: Mr. Speaker, I should like to ask a question of the Minister of Agriculture. Is he in a position to say when we may have a statement regarding butter?


Right Hon. J. G. Gardiner (Minister of Agriculture):: I am still hopeful I shall be able to make a statement tomorrow.


REFERENCE TO STORAGE FIGURES GIVEN IN RETURN TABLED APRIL 12
[Stage Direction]
On the orders of the day:
Mr. G. K. Fraser (Peterborough West):: Mr. Speaker, I should like to ask a question of the Minister of Agriculture. A return, sessional paper 159-A, having to do with butter held in storage and sold by the government, was tabled in my name on April 12, 1951. In this return it is stated that the total sales for January and February, 1951, amounted to 17,696,793 pounds, whereas total individual sales, according to the figures set out in the return, total 18,653,620 pounds.	Will the
minister find out why there is that discrepancy between the actual figures and the figures given?


George Alexander Cruickshank: The rest melted.


James Garfield Gardiner: I shall look into the figures, and give special attention to the alleged discrepancy.


RETALIATORY MEASURES IN THE EVENT OP BOMBING FROM MANCHURIAN BASES
[Stage Direction]
On the orders of the day:
Mr. M. J. Coldwell (Roseiown-Biggar):: Mr. Speaker, I should like to ask a question of the Secretary of State for External Affairs. Has Canada, as a participant in military action in Korea and as a member of the United Nations, been consulted regarding the announcement that enemy air bases in Manchuria will be attacked if the Chinese communists use heavy air power against United Nations troops? If so, will the minister make a statement in this connection?


Lester Bowles Pearson: Mr. Speaker, in reply to the important point raised by the hon. member, I would say that so far as the government is aware, no announcement on the subject has been made. The hon. member is presumably referring to a report in this morning's newspapers which is attributed to a spokesman for the United States delegation at Lake Success.


Major James William Coldwell: That is right.


Lester Bowles Pearson: However, 1 am very glad to have this opportunity of making a brief statement of the government's position in regard to this matter.
Some five months ago the government informed the United States government, in response to an inquiry from that government-they brought the matter up-that, though a strong case could be made under international law that the United Nations commander in chief had the right to retaliate against any air attacks launched from Manchuria, we considered it important, as indeed did other governments, that no military operations take place outside Korean borders without specific authority from the United Nations.
Since that time various aspects of the Korean operations have been the subject of discussions in Washington, as indeed I have indicated previously in the house, among representatives of the countries having forces in Korea.
So far, however, the Canadian government has received no request for concurrence in any proposal to authorize United Nations retaliation upon enemy air bases outside Korea, probably for the very good reason that there has been no massive enemy air

bombing from Manchuria. If there is such air intervention, for the consequences of which the Chinese communists would have to bear full responsibility, it is our view that those countries with forces in Korea, and participating in military operations there, should be consulted in regard to the implications of that action-that is, air bombing- and in regard to any retaliatory action which may be required to meet it.
However, it is of course possible to visualize a situation where immediate retaliatory action, without consultation, might be unavoidable in pursuing enemy bombers back to the Manchurian air base from which they came. The decision on the spot to take such immediate retaliatory action would presumably be based on overriding considerations of military security.
In any discussions regarding more general retaliatory action against Manchurian air bases, the decision to authorize such action would, as we see it, have to balance very carefully local military considerations against the risk of precipitating a further extension of the war and the effect of such an extension on the security of the United Nations forces in Korea, and the accomplishment of United Nations aims there.


Mr. Graydon:: Is there any continuing conference of representatives of nations whose forces are engaged in Korea, through which these matters can be cleared at very short notice; or do they have to go through the long procedure of conferring among the governments of the various countries?


Lester Bowles Pearson: No; the representatives of
governments contributing forces to the Korean campaign meet almost daily in Washington, and on a level high enough to make it possible to get a decision almost immediately in respect of these matters.


NATIONAL DEFENCE
[Stage Direction]
On the orders of the day:
Mr. L. T. Stick (Trinity-Conception):: Mr. Speaker, I should like to ask a question of the Prime Minister. A report from Washington last night stated that an agreement has been concluded in connection with the American bases in Newfoundland, and will be announced shortly. Would the Prime Minister care to make a statement in the matter at this time?


Right Hon. L. S. St. Laurent (Prime Minister):: I thank the hon. member for
having sent me this morning notice of his intention to ask this question, which refers
Inquiries of the Ministry to negotiations still under way with the government of the United States. I do not think it would be proper for me to make any statement today, but I hope to be in a position to do so early next week.


HOUSING
[Stage Direction]
On the orders of the day:
Mr. W. Ross Thatcher (Moose Jaw):: I
should like to ask a question of the Minister of Resources and Development. In view of the increasing reluctance or outright refusal of Canadian insurance companies to make loans for house building in many localities under the National Housing Act, has the government considered entering the housing field where necessary and providing the total National Housing Act loan, as it is empowered to do under the act?


Hon. Robert H. Winters (Minister of Resources and Development):: I thank the
hon. member for having given notice of his question. I can only say that the whole problem of housing is receiving the active consideration of the government. The decisions made will be announced from time to time.


Wilbert Ross Thatcher: Does the minister realize that many Canadian insurance companies in most parts of Canada are not lending money under the National Housing Act?


Robert Henry Winters: I am aware of the development in that field.


IMMIGRATION
[Stage Direction]
On the orders of the day:
Mr. J. G. Diefenbaker (Lake Centre):: I
should like to direct a question to the Minister of Citizenship and Immigration. A week ago I asked a question arising out of a statement which had been made by John Fisher, the well known C.B.C. commentator, with regard to the treatment of immigrants. The day before yesterday Mr. Fisher is again reported to have spoken in Toronto to the effect that he is still healthily hot under the collar over the way immigrants are treated when they arrive in Canada. I should like to ask the minister whether he has made any investigation with regard to the statement made by Mr. Fisher to the end that any bureaucratic injustices to immigrants will be done away with, if such action is justified by the investigation.
2398	HOUSE OF
Inquiries of the Ministry


Hon. W. E. Harris (Minister of Citizenship and Immigration):: As the hon. member has said, this matter was drawn to the government's attention a week ago today. We attempted to get in touch with Mr. Fisher to ascertain the basis of his complaints, and succeeded in doing so only the day before yesterday, by telephone, when he promised to write us and let us know the details. His letter was received this morning, and I would prefer to wait until tomorrow to make an answer.


Mr. Brooks:: Can the minister state at what port the immigration station in question is located?


Walter Edward Harris: The first report which appeared in the Toronto Telegram referred to Moncton. The Telegram got in touch with our immigration officer at Moncton to ask for his reaction. As a result, Mr. Fisher sent a telegram to our office at Moncton apologizing and stating that he had not intended to refer to him but rather to the inspection at Montreal. It is that port we are now discussing.


NATIONAL CAPITAL PLAN
[Stage Direction]
On the orders of the day:
John George Diefenbaker: should like to ask the Prime Minister if the final report of the national capital planning committee is ready.


Louis Stephen St-Laurent: I understand that the report is
being completed and will be ready for presentation at a function which the chairman of the federal district commission is now arranging. I cannot indicate just what the details of the arrangements are, but I know that simultaneously with the publication of the report he is arranging for a meeting of one of the advisory boards of the federal district commission.


John George Diefenbaker: Will that meeting have to take place before the report is tabled?


Louis Stephen St-Laurent: I understand that Mr. Greber is about to come over, or is on his way over, and that all that is being co-ordinated to take place at the same time.



EXTERNAL AFFAIRS


[Stage Direction]
On the orders of the day:
George Alexander Drew: Mr. Speaker, I wish to direct


a question to the Secretary of State for External Affairs, of which I have given notice. I might explain that in the ordinary course of events this question could be put forward conveniently as a question on the order paper, but in view of the fact that the budget resolutions are being discussed I am putting the question in this way. I should like to know the number of employees in the international conference section which was set up last year to deal with invitations to international conferences, and the name of the official who heads that section.


Lester Bowles Pearson: The international conference section of the Department of External Affairs is a branch of the United Nations division and reports directly to the under-secretary. It consists of a foreign service officer, two clerks grade IV, and a stenographer. Subject to correction, I think the name of the foreign service officer is Mr. Hardy. If that is not the correct name, I shall be glad to give it to my hon. friend later.


ARTS, LETTERS AND SCIENCES INQUIRY AS TO TABLING OF REPORT OF ROYAL COMMISSION
[Stage Direction]
On the orders of the day:
Mr. Donald M. Fleming (Eglinlon):: In view of the fact that a week has passed since the date on which the Prime Minister expected to be able to table the report of the royal commission on arts, letters and sciences, will he indicate when we may now expect it?


Louis Stephen St-Laurent: I stated subsequently that I had been too optimistic. I have been informed that there are some difficulties in connection with the translation and printing of the report, and the latest information I have is that we may not have it until about May 14.



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
George Alexander Drew: In view of the fact that the budget debate has now been completed, will the Prime Minister indicate to the house the legislation that the government proposes to introduce during the present session?


Louis Stephen St-Laurent: I should not like to attempt to do that without notice. A substantial legislative program is indicated on the order paper, and before that is disposed of by the house

there will be several other items added. I should not like to attempt at this moment to give anything like a complete indication of what it may be necessary to deal with during the course of this session. As early as we can find it convenient to do so, we will make as complete a statement as possible.


George Alexander Drew: As a supplementary comment I would point out that while the press reports may be entirely speculative, there have been some comments about the possibility of not carrying forward an extensive legislative program during the current part of this session but deferring it to the autumn. It is with such a possibility in mind that I express the hope that we will proceed with the legislative program with some knowledge of when the various measures will be coming up. I *was thinking particularly of the possibility of the early introduction of old age pensions legislation, in view of the statement made yesterday by the Minister of Justice (Mr. Garson).


Louis Stephen St-Laurent: 1 can assure the leader of the opposition that just as soon as we have cleared the matter of the text with the ten provincial governments there will be an address submitted to this house and to the other place to seek the constitutional amendment required. With respect to the speculative stories in the newspapers about an adjournment of the house, to proceed again in the autumn, I can assure the hon. gentleman that I was as much surprised as he was to see that in the newspapers, because it was something which had not been given any consideration by the government.



BUSINESS FOR FRIDAY, APRIL 27

[Stage Direction]
On the orders of the day:
Mr. J. L. Gibson (Comox-Alberni):: I should like to direct a question to either the Prime Minister (Mr. St. Laurent) or the house leader, the Minister of Public Works. In view of the fact that a large number of members are going to Toronto tomorrow afternoon to acquire some culture, would the government be willing to indicate what will be the order of business tomorrow when everybody is away?


Hon. Alphonse Fournier (Minister of Public Works):: We are living in the hope that the budget resolutions will carry today. I am holding back the Minister of Transport (Mr. Chevrier) from travelling to Toronto, so that he can conclude his estimates and take up one bill.
Excise Tax Act NEWSPRINT



PRESS REPORT OF ADDRESS DELIVERED IN NEW YORK BY CONTROLLER

[Stage Direction]
On the orders of the day:
Mr. Stanley Knowles (Winnipeg North Centre):: I should like to direct a question to the Minister of Defence Production. Has the minister's attention been called to a report in today's press of an address made in New York by Mr. Fowler, the newsprint controller, in which he is reported to have taken a stand against any price ceiling on newsprint being established by the United States? May I ask whether Mr. Fowler was expressing Canadian government policy in taking that stand?


Right Hon. C. D. Howe (Minister of Defence Production):: I am sorry I have not seen the report, but I presume that if Mr. Fowler made such an address he was speaking in his capacity of president of the Canadian Pulp and Paper Association. He had no authority, so far as this government is concerned, to state that as a policy, as an officer of the government.


Stanley Howard Knowles: May I just point out that in the newspaper report Mr. Fowler is referred to as acting in both capacities, as president of the pulp and paper association and also as the government newsprint controller.



WAYS AND MEANS

[Stage Direction]
The house in committee of ways and means, Mr. Dion in the chair.

[Stage Direction]
Resolved, that it is expedient to introduce a measure to amend the Excise Tax Act and to provide:
1.	That the rate of the general sales tax be increased from eight to ten per cent and that the rate of sales tax on those articles at present subject to four per cent be increased to five per cent.
2.	That the excise tax on goods mentioned in schedule I of the act, and on furs, that are at present subject to the rate of fifteen per cent be increased to twenty-five per cent.
3.	That the excise tax on candy, chocolate, chewing gum and confectionery that may be classed as candy or a substitute for candy, be reduced from thirty to fifteen per cent.
4.	That there be imposed, levied and collected an excise tax of fifteen per cent on the following goods when adapted to household or apartment use:
(a)	stoves, hot plates, grills and other appliances when adapted wholly or in part for cooking and when designed for using other than solid fuels;
(b)	washing machines operated by electric or other power;
(c)	electric, gas or kerosene refrigerators and freezing equipment and complete parts therefor including coils, condensing or compressor units, motors, cabinets, boxes, evaporators and expansion valves.
5.	That the excise tax on cigarette papers and cigarette paper tubes be repealed.
2400
[Stage Direction]
Excise Tax Act
6.	That the excise tax on the following goods be increased by the amounts shown:
(a)	for each five cigarettes or fraction of five cigarettes contained in any package, three-quarters of one cent;
(b)	for each ounce or fraction of an ounce of manufactured tobacco, including snuff but not including cigars and cigarettes, contained in any package, three cents;
(c)	for each ounce or fraction of an ounce of Canadian raw leaf tobacco when sold for consumption in Canada, three-quarters of one cent.
7.	That the sales tax on the following goods be repealed:
(a)	cortisone;
(b)	adrenocorticotrophin (ACTH).
8.	That any enactment founded upon this resolution be deemed to have come into force on the eleventh day of April, nineteen hundred and fifty-one.
The Chairman:: Order. The house in committee of ways and means to consider a certain resolution, Excise Tax Act. Shall the resolution carry?


Mr. Macdonnell (Greenwood):: No. I take it we are dealing with paragraph 1 of the Excise Tax Act resolution. So far as the rate of the sales tax is concerned, I do not propose to reiterate the remarks which I and others have made, but in view of the strong feeling about it I want to ask one general question. The minister made the ingenious argument in his budget speech that it did not affect people very much. I do not think we would get a majority for that view anywhere in the country except in this chamber. In view of the fact that it is proposed to increase the rate of tax by twenty-five per cent, from eight to ten, or from four to five, as the case may be, I should like to ask whether any
consideration has been given to the possibility of increasing the exemptions under the tax in order to try to offset the burden of the added cost of living which will fall on so many people as a result of the addition to the tax.


Mr. James Sinclair (Parliamentary Assistant to the Minister of Finance):: Each year when the sales tax is reviewed by the budget committee consideration is of course given to the base of exemptions as well as to the rate of tax. Each year has seen that base extended, and some years quite measurably. For example, that was the case in 1949 and 1950. This year, when we are faced with the problem of raising extra revenue, of course conditions are not quite as favourable as usual to expanding the base, but consideration was given. There are one or two small exemptions this year from the sales tax involving drugs, but that is the only broadening of the base.
As to the hon. member's comments about the part of the family income spent on goods which are subject to sales tax, I have here an analysis by the dominion bureau of statistics giving a break-down according to the various income classes and categories of expenditure. It is not the sort of table that I can read, but if it is of any interest I can have it put on Hansard.


Mr. Low:: Would you put it on Hansardl


Joseph-Alfred Dion: Has the hon, member permission?


Some hon. Members:: Agreed.


James Sinclair: The table is as follows:
SMr. Knowles.)
80709-154J


PERCENTAGE OF FAMILY INCOME SPENT ON MAJOR CONSUMER ITEMS SUBJECT TO SALES TAX FOR VARIOUS INCOME GROUPS
[Stage Direction]
(Based on Results of Dominion Bureau of Statistics Survey of Family Expenditures in 1947-1948)
Family Income Group	Average Family Income in Group	Clothing	Furniture, Household Equipment	Tobacco	Auto- mobiles	Gas, Oil and Tires	Alcoholic Beverages	Food1	Equipment for Recrea- tion2 * *	Confectionery and Soft Drinks	Total8 of Foregoing*	*	%	%	%	%	%	%	%	%	%	%Under 1,051	693	111	4-1	3-5	[DOT]6	1-3	[DOT]7	1-7	1-0	[DOT]9	24-91,051-1,549	1,362	13-2	5-5	4-3	1-3	2-1	11	1-4	[DOT]9	1-0	30-91,550-2,050	1,878	11-5	5-6	4-3	1-4	1-5	1-4	1-4	1-7	10	29-92,051-2,549	2,365	10-1	7-8	4-4	1-9	1-7	1-7	1-4	11	*8	3102,550-3,050	2,865	11-3	7-8	40	2-9	2-4	1-5	1-4	1 5	*9	33-83,051-3,549	3,371	10-9	7-6	3-9	3-7	2-6	1-6	1-2	1-3	*7	33-63,550-4,050	3,844	12-1	7-5	3-7	3-5	2-7	1-5	1-2	1-4	8-	34-34,051-5,050	4,570	120	7-2	3-6	3-3	2-4	1-3	11	1-3	[DOT]7	33 05,051-7,499	6,070	12-6	6-1	31	4-0	3-0	1-3	[DOT]9	1-2	*7	33-07,500 and over	11,145	9-3	4-8	2-1	2-6	2-3	1-2	[DOT]5	1-0	[DOT]5	24-41	Practically all foodstuffs are exempt from tax.2	Included are expenditures on such items as toys, radios, phonographs and records, cameras and films, sports equipment and books.
8 Does not include direct expenditures on certain taxable goods, such as jewellery, toiletries and medicines, nor is account taken of expenditures where sales tax
may be borne indirectly, such as expenditures on travel, where certain purchases of the transportation company are subject to the sales tax.

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[Stage Direction]
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James MacKerras Macdonnell: The parliamentary assistant referred to one or two highly specialized commodities. I take it his answer is that the matter has been considered, and that it is not proposed to do anything further to broaden the base of exemption.


James Sinclair: That is right.


Donald Methuen Fleming: I wonder if the parliamentary assistant has with him information as to the amount realized by way of sales tax on such staple articles as clothing and shoes?


James Sinclair: I am informed there is no break-down that way at all. The tax is levied at the manufacturer's or wholesaler's level, whichever is more convenient, and the tax is paid on all goods that are subject to sales tax-clothing, shoes, and so forth; but the Department of National Revenue does not keep separate records of such goods.


Donald Methuen Fleming: I wonder how the department can perform its function in connection with the preparation of the budget each year, or advise the minister or the budget committee as to what steps should be taken with reference to expanding the exemptions from the sales tax, unless there is a break-down indicating the amount levied on various staple commodities. We all know that clothing of practically every kind1 is subject to sales tax. Boots and shoes are subject to sales tax. The clothing that all of us are wearing in this house this afternoon has been subject to sales tax if produced in Canada. I must express some surprise that it is not possible for the government to acquaint the house with the amount realized from this tax on staple necessities of that kind.
It is because the tax applies heavily, and will hereafter apply more heavily, to staple necessities of life that we in the opposition have been so firm in our denunciation of this increase. At a time when inflation and the soaring cost of living have laid burdens upon people of slender means which under present conditions they are simply not able to bear, the imposition of an increased burden of this kind on the very necessities of life is worthy only of denunciation at the hands of members who are vigilant to do their duty in the face of the difficulties under which so many Canadians are labouring today in making ends meet.
I have mentioned the clothing that we wear, the shoes on our feet. There are many other necessities of life the cost of which is going to be severely increased as a result of this further imposition by way of sales tax. I gave a simple illustration the other day, the scribblers, pencils and things of that nature that school children are going to have

to buy. In. some municipalities these articles are provided by the boards of education at the expense of the local taxpayers. What justification can there be for the federal government to increase impositions of that kind on such necessities, the cost of which is borne either by the parents of school children or by municipal taxpayers who have to provide the means out of which boards of education purchase these necessities? What justification can there be for the federal government to tax local governments in that way? It seems to me that a government at Ottawa that proceeds on that basis has chosen a course that cannot be condoned by the House of Commons.
This present budget resolution, perhaps above all budget resolutions that have provoked a storm of public protest, stands out as the one which has provoked the greatest measure of protest and consternation throughout the country. Others, of course, share the unenviable distinction of this resolution in heaping further burdens upon the shoulders of those who can barely stagger along now in view of the soaring cost of the necessities of life. This has the peculiar distinction of being the one which perhaps more clearly than any other offends against all the rules of budgeting that should be followed at a time like this. That is because it applies to consumers, since there is very little choice with respect to many of the commodities to which the sales tax applies. So many of those commodities, according to any civilized standard, any Canadian standard, cannot be regarded as anything but the accepted necessities of life.
This is the kind of tax that was denounced in a general election campaign ten years ago by the late Mr. Mackenzie King, who went up and down this country calling it an iniquitous tax. Yet this is the tax which in this year 1951 the Minister of Finance has chosen not simply to continue, but to increase by a further twenty-five per cent. We know things change in the Liberal party. We know they have changed drastically when we recall what was said on the subject of the sales^ tax by previous ministers of finance. I am sure I need not repeat the pertinent reference to the sales tax made by the late Mr. Ralston in his budget speech in 1940, the first year of the war. I am sure I need not repeat what was said on this very subject by Mr. Ilsley in wartime, and again in peacetime, in 1945. Faced with the need for increased revenue, they deliberately and purposely declined to increase the sales tax. The need for revenue was very great in the years of which I am speaking. The government claims that its need for revenue today is great. Some of us might feel more certain that the need is

genuinely great if the government were not so averse to permitting any effective scrutiny of the estimates of expenditure they have asked the house to vote. Having tied the hands of the house, having prevented the house from conducting any really effective scrutiny of the estimates of expenditure, the government has deliberately invited suspicion in this house and throughout the country as to whether these gigantic increases in taxes really are necessary.
In any case, whether any increase in taxation is necessary, this is the last place it should have been imposed. If the government seriously appreciated the problem of inflation, if it understood how inflation hurts Canadians from coast to coast in trying to meet their family budgets from day to day, one would have expected a resolute effort to be made to reduce this tax which does so much to increase the cost of living. Those of us who three years ago had to sit through the agonizing experience of the special committee on prices will have some recollection that a good deal of evidence was presented to show that prices were rising and imposing a very heavy burden upon the average Canadian family just because the government was applying taxes of this kind. And those taxes, including the sales tax, are not applied only to luxuries, if you please, but in many cases to commodities which under any accepted Canadian standard are basic necessities of life. In the face of all that, however, the government chooses not to reduce the tax or even to leave it at its previous high level, but to increase it. The present minister has chosen to disregard the words of, and ignore the course followed by, his predecessors, Mr. Ralston and Mr. Ilsley. In the war years and in 1945 the need for revenue was greater, as far as finances were concerned, than is the need of the minister today; none the less they deliberately refused to increase this tax.
It was not that the tax was not easily collected. As a matter of fact, in his budget speech of 1945 Mr. Ilsley referred to the fact that the tax was very easy to collect. Therefore it is the kind of tax that might be expected to appeal to a minister of finance who was not concerned with anything more than the ease with which he and his tax collectors could put their hands into the pockets of the people and withdraw the needed revenue. Those previous ministers, faced with that problem, chose not to increase the sales tax. The present minister, faced with a similar problem, nevertheless now comes forward with a proposal that the tax be increased by a thumping twenty-five per cent. I say there is no justification whatsoever for this budget resolution. I should have thought this would
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have been one opportunity for private members supporting the government in this house, concerned as they surely must be with the problems being faced by Canadians in trying to meet their family budgets, to rise in their places and say: We cannot support an increase in the sales tax when we know what further burdens it is certain to impose upon Canadian families.
We will listen attentively for some evidence that the pleas of the people, particularly those of small means who by the tens of thousands in all parts of this country are barely keeping their heads above water in the face of the soaring costs of the necessities of life, have made some impression upon the private members in this house who support the government.
What does this mean? The tax does not mean just 10 per cent. We have been faced before with this question of what this tax really does mean in terms of what the consumer must pay. It is levied on the producer or manufacturer because that is where it is easiest for the government to collect it. That is the one reason why this tax is imposed at that stage of the process by which goods are fabricated and made available to the consumer. It is easy for the government to collect. It is easy to administer. It is easy to enforce. They are not dealing with so many people at that stage of production and marketing. For that reason the tax is imposed at the source; and there it is carefully hidden. But as you know, Mr. Speaker, every time a commodity passes from one hand to another the tax acts like a snowball. It attracts mark-ups at every stage. I am not going to inflict upon hon. members the example I have given previously, but you will find in a simple case where the commodity passes through only three hands, from producer to wholesaler, who adds his 10 per cent mark-up, from wholesaler to retailer, who adds his 50 per cent mark-up, and then directly into the hands of the consumer, that the tax previously amounted to not 8 per cent, but 14-4 per cent, when the consumer had to pay it. Now the tax is 10 per cent at the source, and in that simple illustration by the time it reaches the consumer it amounts to 18 per cent, which is a nice round figure. If this afternoon this house approves this budget resolution and it becomes law, this house is not increasing the tax on these necessities of life simply by 2 per cent. In even the simplest case it is increasing the tax by no less than 3 [DOT] 6 per cent. That is the simple situation. We are invited by this government, in the simplest case, the case that costs the consumer the least, to boost a tax on the consumer up to 18 per cent.

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Anyone who is looking around seriously for reasons why the cost of living is high today cannot fail to stop in the first place at this sales tax. The Minister of Finance can talk until he is black in the face about this international phenomenon of inflation, but he cannot change the basic fact that this government is the big factor in creating inflation in this country today. Anyone in this house who is looking about seriously for a means of reducing the soaring cost of living to make it a little bit easier for people to meet their budgets will start right here. He will begin by refusing to support this iniquitous resolution, this tax that is doubly iniquitous because the proposal is to increase a tax that sixteen years ago Mr. Mackenzie King denounced up and down the country as iniquitous. What would he say today, sixteen years later?
In 1935, sir, the problem was not one of high prices. The principal problem in 1935 was one of low prices to the producer. It would have been relatively an easy matter then to say, if Mr. Mackenzie King had chosen to do so: Oh, well, this does not add very much to the cost of living; this does not take very much out of the pockets of the people, because prices are so low. What is the situation in 1951? If this tax was iniquitous in 1935, then this increase is an infamous proposal to put before the House of Commons and the people of Canada today a :25 per cent increase applying to so many .things that are basic necessities of life.
It seems to me, sir, that this resolution is as clear a test as this house is likely to face, at this or any other session of parliament, as to just how serious each individual member is on this subject of concern for the lot of the Canadian family in meeting its budget in the light of the way the rising cost of living has torn that budget to shreds and tatters in hundreds of thousands of cases. Here is a simple test every member of this house will be called upon to face. I hope there will be full opportunity given and taken, when you call finally for a vote on this particular resolution in this committee or elsewhere, for members to indicate- every one on his own personal responsibility, regardless of whether or not he is a supporter of the government-whether he is really serious in expressing his concern for the problem faced by the average Canadian family with respect to the high cost of living today. I believe, sir, that to a degree rarely existing in this House of Commons, every member is on trial this afternoon, placed there by this first resolution.


James Sinclair: I should like to answer the
hon. member immediately on one point which he raised. The bulk of his speech is exactly the same as he delivered in the debate on the budget, perhaps with a little more volume.


John Lambert Gibson: The needle scratches more.


James Sinclair: Yes, as the hon. member for Comox-Alberni says, the needle scratches more. I only wish, however, that his historical facts could match either his eloquence or his volume. He made reference to the late Mr. Mackenzie King, and his views on the sales tax. I have here a record of the sales tax in Canada. I note, for example, that when the Liberal party went to the country in 1930 the sales tax was one per cent. When R. B. Bennett went to the country in 1935, after five of the most difficult years Canada has ever known, and in which the cost of living was a terrific problem because there were so many tens of thousands who had no income-unlike today, when they are enjoying the highest employment and highest income they ever had-Mr. R. B. Bennett, who was not only prime minister but minister of finance, had increased the sales tax not by twenty-five per cent but by a walloping five hundred per cent. When the Tories left office in 1935 the sales tax had risen to six per cent. Well might Mr. Mackenzie King in those days have said that such an increase was iniquitous.
Let us compare what has happened-


Donald Methuen Fleming: He was not talking about
the increase, but about the sales tax itself. He called it an iniquitous tax. Perhaps the hon. gentleman would indicate what the Liberal party has done in sixteen years in office about this iniquitous tax.


Joseph-Alfred Dion: Order.


James Sinclair: I sat quite patiently while
my hon. little friend was working himself into his usual temper, waiting until he finished. I would point out that I do not regard the hon. member as an authority on what Mr. Mackenzie King thought in 1935. I would rather refer to one of the Liberal members, in any case, any prime minister who saw that one per cent sales tax, which was after all imposed in good times-1927, 1928 and 1929 were good y-ars-


Mr. Fulton:: The depression started in 1929, caused by the Liberal government.


James Sinclair: The hon. member for Kamloops has neither his facts nor figures right. The depression did not hit Canada in 1929. We were a full year behind the Wall street crash.


Donald Methuen Fleming: You were not born then.


Joseph-Alfred Dion: Order.


James Sinclair: The hon. member, as usual, is trying to bolster up his argument by these continual interruptions, although other hon. members sat patiently while he was making his speech. As I was saying, R. B. Bennett increased the sales tax from one per cent to six per cent, a five hundred per cent increase, at a time when there have never been so many Canadian families faced with a great problem in attempting to buy any commodity, and at the same time the basis of that sales tax was far broader than the one today.
As the hon. member points out-his arithmetic is correct here-we have been in power sixteen years. The sales tax has gone up from six per cent to eight per cent, and now to ten per cent. But many other things have happened since so far as government expenditures are concerned. Let me just detail some of them. I see the member for Vic-toria-Carleton smiling broadly. We brought in family allowances, and it cost $300 million. The Tories in those days opposed the measure. They still will not face the fact that revenue is necessary to make this great transfer payment.


Gordon Knapman Fraser: The Tories did not oppose family allowances. What are you talking about?


Alfred Johnson Brooks: Mr. Chairman, the hon. member knows that when that act came before parliament there was only one who opposed it.


James Sinclair: The hon. member was here, just as I was here, and we remember the introduction of the bill. We remember that the Tories opposed the resolution, and that the member who is now the leader of that party, but was then premier of Ontario, said he was opposed to this iniquitous legislation which he would fight in every court of the land. We recall the attitude of the Conservatives when the resolution was introduced. When they saw the general feeling in the country towards the measure, they quickly climbed aboard the bandwagon, as they usually do, and said we were doing the right thing but in the wrong way.


Edmund Davie Fulton: If that is the case, why does the hon. member continue to assert that this party opposed the measure? He has just proven that is a wrong assertion by the statement he has made.


James Sinclair: At the resolution stage they opposed it.


Joseph-Alfred Dion: Order. The parliamentary assistant has the floor.
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Edmund Davie Fulton: The hon. member has just said that at the resolution stage they opposed it. At first he said that they opposed family allowances, seeking thereby to indicate that they opposed the whole measure. By his own words he has proven himself wrong.


Joseph-Alfred Dion: The hon. member may rise on a point of order or a question of privilege, but the parliamentary assistant has the floor.


Mr. Hodgson:: Is the parliamentary assistant not out of order in bringing this subject up at this time?


James Sinclair: I know how sensitive the Conservatives are on this matter. I have not yet had the member for Kamloops explain the change of heart that his present leader had.


Mr. Ferguson:: On a point of order, Mr. Chairman, may I ask what right the parliamentary assistant has to wander all over the Dominion of Canada and discuss every subject in the world? Why does he not pin himself down to the subject in question? If he does not do so, it is the privilege of every other member of this committee to discuss matters in the same manner as he is discussing them. He is making a political speech on this question, and he knows it; and he has no more privileges than we have.


James Sinclair: Anybody who has just
listened to the hon. member for Eglinton knows what a political speech he was making.
I am trying to show-and if the hon. member for Simcoe North will listen carefully, he will find this out-some reasons why the sales tax has been increased over the years, and that the increases by this party from six per cent to eight per cent and now to ten per cent have been for some good social security measures which have to be paid for. Today in Canada we have 5,200,000 people gainfully employed. Less than half of those people pay income tax-2,200,000 in all.


Stanley Howard Knowles: Why?


James Sinclair: My hon. friend asks why
they pay income tax. If he had his way, of course, there would be no income tax.


Stanley Howard Knowles: Just a minute. They pay
no income tax because their wages are too low.


James Sinclair: As to not paying income
taxes when the wages are too low, may I say that one of the hon. members sent me notice of a question he was going to ask me on the income tax resolutions, namely, to put on the record the income tax exemptions in Britain, in the United States and in Canada, and to compare the actual tax paid by a family man earning $3,000-that is, at $1.44 an hour-with two children. When the

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income tax resolutions are -before us, I will put that information on the record.
The reason I mention the fact that less than- half the wage earners of Canada pay income tax is to show that these social security measures which are enjoyed by all the people of Canada must be paid for in some measure by all the people of Canada. We have had this increase in sales tax which has -gone in part to pay for these desirable social services which the Canadian people want, which they show, broadly, that they want, and which hon-. members of the opposition are always anxious to criticize as being too niggardly. As the Minister of Finance said when he presented the budget, this is the day of reckoning. The hon. member for Eglinton waxed extremely wrathy about this twenty-five per cent increase in the sales tax. I would just remind him of the fact that when his party was in power and had to do things, not just talk about them, they increased the sales tax in those extremely difficult days by five hundred per cent.


Major James William Coldwell: I do not want to get into a political argument, particularly as between the official opposition and the parliamentary assistant to the Minister of Finance; but I want to say that this tax is wrong in principle and is a vicious one in that respect. When I say it is a vicious tax in that respect, I am only repeating what Mr. Mackenzie King said in 1934. It is true that when the Liberal party went out of power in 1930,-


Julian Harcourt Ferguson: It is too bad they did not
stay out.


Major James William Coldwell: -in the Dunning budget of that year the sales tax was reduced to one per cent. It is perfectly true that during the next four or five years the sales tax was increased to six per cent. But since then it has been increased to eight per cent and now to ten per cent. It is a specious argument to say that in those days, because people had little income, the tax of four per cent or six per cent bore less heavily on- them than it does when there is a higher income across the country. Let me point out this fact to the hon. gentleman-. While it is true that in those days there were several million people in Canada who had no income and who were suffering acutely under the conditions that then existed, today there are many thousands of people, such as old age pensioners, those on veterans pensions, people on fixed incomes,-


Mr. Adamson:: Canadian National Railway pensioners.


Major James William Coldwell: -and persons who have been retired by the railways, by the banks and by educational institutions, who contributed

throughout the years to superannuation funds and who today to my certain knowledge are unable to make ends meet with the pensions upon which they are called upon to subsist or to exist, whichever way you care to put it. There are also, on the farms and in the cities, other thousands of people whose per capita income is so low that they are unable to live decently. As has already been said, these are taxes that are placed on certain basic necessities of life. It is all very well for the minister to -say that it does not affect foods and some other things. But such things as clothing, boots and shoes, certain household necessities, equipment and so on are basic necessities of life. The tax is to be raised, not twenty per cent as one of the hon. members said the other night, basing it on what the tax will be in the future; but basing it accurately on what it is now, it is increased by twenty-five per cent.
This tax is an iniquitous one. You have only to go back to the time referred to by my hon. friend and read some of the criticisms that were made in the house at that time by Colonel Ralston-who at that time was the financial critic of the Liberal party-and by other members of the party, both in the house and outside of it, in order to realize how times have changed and how the tune of the members of the Liberal party has changed both here and in the country, in regard to the principle of the sales tax.
During the budget debate I made a proposal which I should like to get considered. In that debate I said that we know the government are going to impose this tax. We know that they are going to impose it. The majority in the House of Commons is such that we know perfectly well that nothing we can do can stop anything this government wants to do.


Mr. Hatfield:: Too much power.


Major James William Coldwell: Such is the government's overwhelming majority, even if a few hon. members had the courage to vote against the government.


An hon. Member:: Which they have not.


Major James William Coldwell: The government has such an overwhelming majority that it could not be defeated. I believe, however, that a vote on this particular paragraph should be called and that we should have an opportunity of voting on it. I do not believe, as has been claimed on occasions in the past, that the resolution must be voted on in its entirety.
I say that we should have an opportunity to vote on this resolution clause by clause, and that on this -clause in particular all hon. members should have an opportunity of voting. The hon. member for Eglinton is

perfectly right. It is not only a matter of what the tax is and what this increase in tax means in tax, but it is a matter of what it is when it is pyramided after the several profits have been added on to the original cost plus the tax. As reported at page 2054 of Hansard, I said:
We object, and always have objected, to this tax on principle, but since it is going to be imposed anyway we urge the house to provide that the ultimate consumer shall pay only the tax on the first or manufacturer's price.
Or on the producer's price or first cost. If we did that, the government would be getting all the tax that the people are paying. They get the ten per cent tax anyhow. But in the meantime other persons who handle these goods, and put a mark-up on those goods, are putting a mark-up on the taxes so that the tax pyramids. I took a conservative estimate the other day. I said it would go up to thirteen per cent or more. I took mark-ups that were low. I am quite sure that the hon. member for Eglinton, when he talks about eighteen per cent as he did this afternoon, is much nearer the mark than I was in the budget debate. Therefore I think that we should make the strongest possible protest against the imposition of this sales tax on necessities of life. If the government wants to put a sales tax on luxuries it could put it on other things. We mentioned alcoholic liquors the other day; but there are lots of other things besides alcoholic liquors upon which luxury taxes, and high luxury taxes, could be imposed. We could put further taxes on things like jewelry; we could put further taxes on such things as expensive silverware, and high-priced clothing-all that kind of thing-


An hon. Member:: Can you get anything cheap?


Major James William Coldwell: -and exempt the lower
priced clothing. Indeed, as we suggested in the debate, the government might designate certain articles as utility commodities, and relieve them of this kind of tax, as was done in some other countries during the war and in the immediate post-war years.
I look back over the last twenty years or so and remember the discussions on the principle of the sales tax. I remember the speeches in the house and I remember them in the country; and I think if we could dig up this afternoon-as it would have been easy to do, had we had the time-the advertising put out by the Liberal party in 1935, or again in 1930, when it took such tremendous credit for reducing the sales tax to one per cent, and told the country it was a step toward wiping the sales tax out altogether, and in 1935 when it denounced the increased tax-
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Mr. Hetland:: What about the C.C.F. government in Saskatchewan?


Major James William Coldwell: I am glad my hon. friend mentioned that. The sales tax in Saskatchewan of two per cent-


Joseph Ingolph Hetland: Three per cent.


Major James William Coldwell: Wait a minute-two per cent-was put on by a Liberal government.


Joseph Ingolph Hetland: During the war.


Major James William Coldwell: I beg your pardon.


Joseph Ingolph Hetland: During the depression.


Major James William Coldwell: Before the war. And let me say to my hon. friend that it touched a large number of necessities that have since been relieved of that sales tax. It is true that today, because of the invasion of provincial revenues by this federal government-


An hon. Member:: Where?


Major James William Coldwell: All right, all right, now-


John Lambert Gibson: You raised it 50 per cent.


Joseph Ingolph Hetland: And now you want indirect taxation.


Major James William Coldwell: Well, the noisy interruptions show when something hurts.


James Sinclair: It sure does.


Major James William Coldwell: You hear squeals only when something hurts.


Mr. Marlin:: Why squeal, if it doesn't hurt?


Major James William Coldwell: Well now, it, is true that in Saskatchewan the tax was put on by a Liberal government. I do not mind saying-


Mr. Ferrie:: May I ask a question?


Major James William Coldwell: Just a moment. You can ask it when I have finished. I do not mind saying this, that I do not like the sales tax, whether it is put on by a federal government or a provincial government.


Gladstone Mansfield Ferrie: You are saying that because you have it.


Major James William Coldwell: And I am not defending any government for putting on a sales tax. The criticism I make is made of the principle of the sales tax generally, by whatsoever government it is put on. And let me point this out to hon. members, when they point to the tax in Saskatchewan, that it was a Liberal government that put it on.


Gladstone Mansfield Ferrie: You promised to take it off.


Major James William Coldwell: And the C.C.F. took it ofI on a wide range of necessary articles.


Alfred Johnson Brooks: What about New Brunswick?

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Major James William Coldwell: Liberal governments in this country, or governments in which Liberals have predominated in coalitions, have put on sales taxes, or are putting on sales taxes of three per cent, or are seeking a new right to put them on. So let us have no more of this nonsense. Let us discuss the matter from the point of view of principle.
Whether the tax is put on by a Conservative government, a Liberal government, a C.C.F. government, or any other government, the principle is wrong. I never have changed my mind on that; I have never changed my opinion; I have never changed what I have said publicly in that respect- and I do not intend to change what I have said in that respect, wherever I happen to be speaking.
So I hope there will be an opportunity to vote on this paragraph; and I hope that hon. members who feel as I do and who are anxious to help the people who sent us here, and to consider their welfare and their needs, will not lend themselves to the imposition of this tax, which is going to affect so adversely so many thousands of people in this country.
I am quite sure of this, that I am not alone in this respect. Seldom does a day go by but what I get on my desk a letter from an old age pensioner, a letter from a veteran, a letter from a widow or a letter from some other person who tells me of the hardships they and their families are suffering today from high prices throughout the country.
I am proud to say our record is clear in this respect. From the beginning we have opposed this inflation; and I am not going to lend my vote to placing a further burden on the people who are least able to afford it. Let us try to vote this proposal down now.


George Alexander Drew: Mr. Chairman, to bring this matter to a head-and I do not think there is much difference of opinion on this side of the house as to procedure-as a procedural motion I move:
That the committee deal with this resolution paragraph by paragraph.


James Sinclair: This matter was dealt with two or three years ago, on the question of procedure. We have here one resolution to amend the Excise Tax Act. Hon. members can vote for it or against it, but for convenience the resolution is moved in this form. The Minister of Finance made a speech on this point some two years ago in which he stated that this is one resolution, to be adopted as one resolution.


Stanley Howard Knowles: 
John George Diefenbaker: I join with my hon. friend in supporting the propriety of these sections being voted upon separately. The citation to which he refers reads:
A motion which contains two or more distinct propositions may be divided so that the sense of the house may be taken on each separately.
If that were not so then the house would simply be in the position of an automaton carrying out everything the government wanted done, whether certain things contained in a resolution were acceptable or not. Surely parliament is not to be emasculated in that way. The section of the resolution in question reads:
1. That the rate of the general sales tax be increased from eight to ten per cent and that the

rate of sales tax on those articles at present subject to four per cent be increased to five per cent.
Then the next section provides for an increase of the excise tax on goods mentioned in schedule I of the act, the increase being from 15 per cent to 25 per cent. The next section provides that the excise tax on candy and so on be reduced from 30 to 15 per cent.
If the proposition were accepted that the house could not vote on these items individually, no matter how many in the house were opposed to No. 1, the purpose for which parliament exists and this committee is constituted would be entirely denied. After all, rules are made in order to expedite the fullest possible discussion consistent with the exigencies of parliamentary debate. The citation has never been changed. The need for such a citation and the propriety of the course being followed of each item being voted on individually is clear from a mere consideration of what the result would be if such were not the fact.
Parliament would be placed in this position. The government could place in its motion five or six items that were acceptable and one item that no hon. member in the house would accept, and yet the committee would be denied the opportunity of saying whether each particular section was proper and whether any particular section was not proper. In other words, if the contention of the parliamentary assistant be correct,, we are in the position of simply having to take everything that the government hands out without the opportunity of voting on those things that we believe are not proper. I submit that ordinary reason and ordinary common sense supports the citation to which reference has been made.


Solon Earl Low: Mr. Chairman, I want to support a contention put forward by the two hon. gentlemen who have spoken on the point of order, and I am not going to take any great length of time in doing so. The hon. member for Winnipeg North Centre and the hon. member for Lake Centre have put forward good reasons why the committee should be allowed to vote on section 1 of the resolution separately from the rest. I support the leader of the opposition in his motion and suggest that if the government does not allow the committee to vote on section 1 it is because it is afraid to have such a vote taken. In fact I am going to go so far as to accuse the government of attempting to evade the issue and making it impossible for individual members of the Liberal party to vote according to their convictions.
These members will be able to go home after this session and say, "I could not vote
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for the amendment that was moved by the opposition because it would have meant a vote against the other taxes that were included in the resolution, but if we had been allowed to vote on just the sales tax, I would have supported the amendment." That is what every single one of them will say. I am accusing the government that if they do not allow this to be votedi on as a separate item they do so because they are afraid to allow the members of this committee to vote as their conscience directs them.


Joseph-Alfred Dion: I think I have heard enough to permit me to give my ruling. After hearing the reasons given by different members I must say that I agree with the motion moved by the leader of the opposition that each item should be voted on separately.


Mr. Martin:: There is now no motion that we should deal with this item by item; there was no motion before the chair.


Joseph-Alfred Dion: The committee is master of its own rules.
Motion (Mr. Drew) negatived: Yeas, 40; nays, 63.


Stanley Howard Knowles: Mr. Chairman, on a point of order.


Some hon. Members:: Oh, oh.


Stanley Howard Knowles: I do not know what all the laughter is about unless it is from some of the Liberal members who were here before the last election and remember the occasion when the Minister of Finance rose to a point of order after having been beaten on a vote. My point is that the citation dealing with the matter before the committee makes it clear that a motion which is a complicated question can be divided into its several parts on motion of the house, but-


Murdo William Martin: Is the hon. member referring to citation 379?


Stanley Howard Knowles: I am going back of citation 379 to where Dr. Beauchesne got his authority, to page 298 of Bourinot, fourth edition, where it states:
A motion, which contains two or more distinct propositions may be divided so that the sense of the house may be taken on each separately.
I am asking you, sir, to read the whole of page 298 and to note the fact that so far as complicated questions are concerned, the matter can be put to a vote, but so far as a motion containing distinct propositions is concerned, there is no reference to putting it to a vote of the house. The motion before us now is not a complicated question; it is a question with several distinct propositions. You only have to look at it to realize that.

Excise Tax Act
The first proposition has to do with increasing the general sales tax. The second proposition has to do with the tax on furs. The third one has to do with the excise tax on candy, the next one with stoves, washing machines and refrigerators, and so on. There are several 'distinct propositions. I submit that, as it is not a complicated question but a motion with several distinct propositions, the vote just taken does not apply and I as one member of the house have the right to ask that it be considered proposition by proposition, and I so request.


Paul Joseph James Martin: I was going to raise a point of order while my hon. friend was speaking but I thought I had better not interrupt him in case he might raise something that was altogether new. What my hon. friend is arguing now is something he should have argued before the motion of the leader of the opposition was put. The committee has just decided that we shall not vote upon this matter item by item. That is a decision of the committee.


Stanley Howard Knowles: Mr. Chairman, I submit, even as the Minister of Finance submitted several years ago, that taking that vote was out of order. I remind you, sir, that the circumstances are distinctly similar, and I hope we get the same treatment as the Minister of Finance got on that occasion. On that occasion there were several propositions before us in what was called one motion. The proposition to which we objected, as I recall it, was an increase of 25 per cent, 1 believe, in the tax on electrical appliances. There were also some reductions in the same motion to change the excise tax. I think they had to do with bills for electricity. At any rate the situation was on all fours. With some portions of the proposal we agreed and to some portions we objected. We called a vote on that occasion on clause 1, I believe, of the proposition. This was before the last election when we had a much better parliament, so far as the people of Canada were concerned, in that it was more evenly divided
When the vote was taken there were more members present on the opposition side than on the government side, and the opposition won. As a matter of fact one or two members on the Liberal side of the house stood up and voted with us in opposition to that tax. The motion was defeated. Mr. Golding, who was in the chair, showed a great deal of courage throughout the whole proceedings on that day, and declared the motion lost. Then the Minister of Finance began to get a bit agitated as to what was to happen. The late Ian Mackenzie came down and whispered a few things in his ear.


Mr. Abbott:: No, I handled it all myself.


Stanley Howard Knowles: The Minister of Finance cannot deny that the late Ian Mackenzie whispered something in his ear. I do not know what it was.


Douglas Charles Abbott: That was a case where I went entirely on my own. I must correct my hon. friend.


Stanley Howard Knowles: All right. Out of respect to the late Ian Mackenzie it might be better to put the full blame on the Minister of Finance.


Douglas Charles Abbott: He probably would have been able to think of a better one.


Stanley Howard Knowles: I am sure he would have. I am sure if he had had his full way in the matter he would have suggested that the committee rise and report progress. He would have dealt with the matter in some other way, but the Minister of Finance got up and challenged the right of the committee to take a vote on the question, and that was after the vote had been taken. We had a long debate similar to the one we are having now. Chairman Golding, now in the other place, stood his ground, and said that the vote was perfectly proper, and that we had the right to vote on these items one at a time at the request of any member. He agreed with the citations we read and, as I said, he stood his ground. Whereupon the Minister of Finance appealed the ruling, the Speaker was called in, the bells rang, and of course we lost the vote. All of us will remember the tremendous ovation that was given to chairman Golding when he came back to the chair for having stood his ground. Just as the Minister of Finance thought on that occasion after the vote had been taken that he had been wronged, I submit that we have been wronged. What is before us now is not a complicated question, which is governed by the second paragraph on page 298 of Bourinot, fourth edition, but rather the type of motion that is governed by the third paragraph on that page.


Joseph-Alfred Dion: Order. I think the point of order should have been taken before the vote.


Stanley Howard Knowles: Mr. Chairman, I ask for fairness. The Minister of Finance did not raise his point of order before the vote was taken when the question was before the house two or three years ago.


Douglas Charles Abbott: Let us get this straight, Mr. Chairman. My hon. friend's recollection is substantially accurate in reciting the circumstances under which I raised the point of order on the occasion referred to. There was one resolution which included a number of proposals with respect to taxation changes. For purposes of convenience, they were being taken one by one. Whether or not a good

many of the members on this side of the house were at the ball game on that day, I recall that a vote was put on one of the items. I then realized that a grave impropriety had occurred. I raised the point of order that there was only one resolution which could be voted on, and that was the resolution which included all these items. The chairman, our good friend Bill Golding, ruled against me. I appealed his ruling and the members were called in. Although, as the hon. member for Winnipeg North Centre has indicated, we did not have the majority we have today, the house upheld my point of order. That is fair enough. It was established at that time that, where there is one resolution as there is here, it must all be voted on together. Incidentally there is ample opportunity to vote against particular proposals when the sections of the bill are before the house, but in this case it is on all fours with what happened before. I was proved right before and the chairman wrong. The house upheld it, and that is the rule that is being suggested now.


Mr. Maclnnis:: I should like to say a word on this matter. Before doing so I should like to admonish the government not to override members of the house just because it has a large majority. We have all been sent here to deal with matters that affect the people of Canada. The Minister of Finance says there is one resolution before us and that it must be voted on as one resolution. Mind you, that is with the chairman of committees in the chair and the house in committee of ways and means. The Minister of Finance would be equally justified in making the same statement when the bill comes before the house. With the chairman of committees in the chair the minister could say: Here is the bill. You must vote on it as one bill or not at all.


Douglas Charles Abbott: Oh no; it is considered section by section.


Donald MacInnis: Here we have section after section. Let me read them to you. I know that the minister dealt with each one separately in his budget speech. He did not lump them together. There is no relation between them. The first one is to increase the rate of the general sales tax from 8 to 10 per cent. The next one has to do with the excise tax on furs, and other goods mentioned in schedule 1, and is to increase the tax from 15 to 25 per cent. These are different things altogether. Suppose there was included an increase in the excise tax on liquor such as many members of the house would like to have. Almost every member of the house would be in favour of such a tax, and yet in
Excise Tax Act
order to support it hon. members would also have to support the increase in the general sales tax. The thing does not make sense. I again plead with the Minister of Finance not to force members into having to take such action. Certainly I will not take it without an appeal to the Speaker.


Douglas Charles Abbott: I want to correct my hon. friend on one point with respect to the resolution and the bill. As he knows, when a bill is before the house in committee of the whole it is perfectly open to him to move an amendment to any section of the bill. The section of the bill which provides for the particular tax that I think is being discussed here, the sales tax, is and always has been open to amendment when the bill is under consideration. In my submission that does not apply to the general resolution covering the entirety of the government's financial proposals.


John George Diefenbaker: Do you say it is open to amendment?


Douglas Charles Abbott: If a private member can move an amendment to- he cannot move an amendment to increase a tax.


John George Diefenbaker: He cannot. You said he could.


Douglas Charles Abbott: I understand the desire is not to increase the sales tax but to make some other change in it.


John George Diefenbaker: As a matter of fact, Mr. Chairman, if the minister is right in saying that in committee we can move to amend any of these sections, then all objection certainly would be removed. I am glad the minister says that, because that is exactly what we are trying to get. The minister has now spoken officially for the government. If he is prepared now to allow us to move to reduce the amount of this sales tax when the bill comes before the house-not add to it, as he said-I will join with him and say parliament certainly won a victory today.


Douglas Charles Abbott: My hon. friend is too old a hand for that. The minister does not make the rules of this house.


John George Diefenbaker: That is what he is trying to do now.


Douglas Charles Abbott: The minister was saying that any amendment to any section, which is in order, can be moved when we are in committee on the bill. My recollection of the rule is that any hon. member who moves to reduce a tax contained in the bill must propose an alternative tax which would produce an equal revenue. That is my recollection; I am speaking without having checked it up. Any amendment which is in

Excise Tax Act
order under the rules of the house can be moved when we are in committee of the whole on the bill; but I understand we have had a vote on this.


Paul Joseph James Martin: I rise to a point of order. If the motion made by the leader of the opposition is to be taken seriously this discussion is certainly out of order. The hon. gentleman moved the very question now under debate, a question of substance, as to whether or not we would vote on this matter item by item. The chairman put that motion, and the committee voted against the proposal. Surely that should end this discussion, and I submit this with great respect.


Stanley Howard Knowles: On that point of order may I remind you, sir, that before you put the motion of the leader of the opposition you said, after having listened to the arguments some of us had advanced, that you agreed we had the right to consider these paragraphs one by one.


Joseph-Alfred Dion: I said I agreed you had the right to move the motion.


Stanley Howard Knowles: I cannot argue with you, but I am afraid that is not my recollection. I for one felt at that moment that a terrible procedural wrong that was done two or three years ago had been righted. I draw your attention in this respect to page 298 of Bouri-not, fourth edition, where it is said that complicated questions are subject to a vote of the house if one wishes to divide them. But this is something different. I underline the point that a motion containing two or more distinct propositions may be divided so the sense of the house may be taken on each proposition separately. With regard to that sentence there are no qualifying words which say it is subject to a vote of the house. On the basis of that I ask your ruling on my request that we deal with paragraph No. 1 of the excise tax resolution by itself.


Joseph-Alfred Dion: The hon. member has made a statement I think I should correct. I agreed that the motion should be put to the committee, and I did so. The committee is master of its own rules, not the chairman. The committee has given its decision, and the chairman has nothing further to say.


Edmund Davie Fulton: On a question of privilege affecting the rights and privileges of all members of the house, I wish to raise a related matter in connection with the vote which has just taken place in committee. I refrained from raising this question until this moment because I did not wish to interrupt the argument on the point of order; but I observed, Mr. Chairman, as I am sure you and most other members of the committee observed, that after you had put the question

to the committee and had asked for the yeas and nays, two members of the government entered the chamber from behind the curtains.
I raise this as a question of privilege since it is a practice to which I think attention should be called and on which a ruling should be obtained. I know perfectly well there was a majority of more than two for the government, so their presence or absence did not affect the outcome; but I feel that it would be an extremely dangerous precedent to have established if ministers or private members should be permitted to wander into the house or committee at any time during the course of a vote, and have their vote recorded. I refer you to citation 67 at page 25 of Beau-chesne, second edition, which reads:
If a member was not present In the house when the question was put by the Speaker, he cannot have his vote recorded.
Then section (1) of standing order 58 reads:
The standing orders of the house shall be observed in the committees of the whole house so far as may be applicable, except the standing orders as to the seconding of motions and limiting the number of times of speaking.
The procedure being as set out in the rules, I submit that the votes of the Minister of Finance and the Minister of National Revenue should not have been counted.


Joseph-Alfred Dion: I agree that no hon. member should vote unless he has heard the question put.


Stanley Howard Knowles: I am still asking for a
ruling. I am asking for a vote on paragraph 1 of the excise tax resolution.


Joseph-Alfred Dion: As I said, I have no ruling to give, since the committee itself has made its decision.


Stanley Howard Knowles: Then I appeal that ruling
to the house.


John George Diefenbaker: I just want to be clear
on what I understood the minister to say a while ago, that when these resolutions are incorporated in bills-


Douglas Charles Abbott: The bills are based on the
resolutions.


John George Diefenbaker: That is exactly the point
I am making; and when paragraph 1, for instance, comes before the house providing that the rate of the general sales tax shall be increased from 8 per cent to 10 per cent, the minister said it would be possible for any member of the house to move an amendment reducing the amount of that sales tax, provided he suggested a substitute tax. That was what the minister said. If that be correct it would enable any hon. member to move that the amount which would be lost by reducing the sales tax to its former

level might be obtained by a tax on liquor. If that is what the minister said, then I know how my vote will be cast when this matter comes up.


Douglas Charles Abbott: My hon. friend has hearing
as good as mine. I said I did not make the rules of the house, but my recollection was that if a member moved to reduce a tax he must at the same time propose some alternative. I do not know whether that is right or wrong, but whatever is the correct rule will govern. My saying it does not make it so. I may be a minister of the crown, but in that respect I have no greater authority than any other member of the house.


John George Diefenbaker: Is that the minister's
understanding?


Douglas Charles Abbott: That has always been my
understanding of the rule, but the rule will govern. I do not make the rules.


James MacKerras Macdonnell: If we still
have a moment I should like to make one remark. It really has nothing to do with the rules, but I just want to raise the question whether what is happening today has anything to do with fairness and common sense. It is perfectly clear, as far as I can see, that there can be no earthly reason for not wanting to vote these seriatim other than that the government does not wish to give us the chance.


Joseph-Alfred Dion: Order. I am sorry to
interrupt the hon. member but that question has been decided by the committee. A ruling has been asked, and I have given my ruling.
Mr. Speaker resumed the chair and the chairman of the committee made the following report:
A vote having been taken to the effect that the excise tax resolution should not be considered item by item, I ruled that it was not open to a member to ask that it be so considered.
Mr. Speaker put the question as follows:
The question before the house is an appeal from a ruling given by the chairman of the committee of ways and means. He reported that a vote having been taken to the effect that the excise tax resolution should not be considered item by item, it was not open to a member to ask that it be so considered.
Those in favour of confirming the chairman's ruling? I believe the house understands that it is not for me to make a ruling.


Donald Methuen Fleming: On a point of order: With respect, sir, what you have just read, it seems to me, is the reverse of what the ruling was.


Edmund Davie Fulton: With respect, a question of privilege was also raised in committee to the effect that the vote was invalid because of objections that were taken-
Excise Tax Act


Mr. Speaker:: Order, I cannot consider that. That question must be decided by the committee.


Edmund Davie Fulton: Mr. Speaker, with respect, the chairman of the committee at the time said that the point of privilege was correctly raised.


Paul Joseph James Martin: No, he did not.


Edmund Davie Fulton: Yes, he did.


Mr. Speaker:: Order. It is not within my power to review what took place in the committee. I understand that there has been an appeal from the chairman's ruling.


Donald Methuen Fleming: May I ask, Mr. Speaker, that you read the ruling again?


Mr. Speaker:: I shall be very glad to do so. In my opening remarks, I said that it is not within my province to decide this question. An appeal from the chairman's ruling is not to the Speaker, it is to the house. I do not know whether members understood that when they appealed the ruling.


Stanley Howard Knowles: On a point of privilege, I recognize that the matter is not debatable at this stage, and I shall not transgress that ruling, but I think as the one who appealed the ruling it may be in order for me to say that I am not satisfied with that report. However, I am satisfied with what Hansard will record to be the discussion leading up to the appeal that I made.


George Alexander Drew: I think that what would be helpful at this stage would be to know exactly what it is we are voting upon. I must add to that, Mr. Speaker, that I am really unaware of what it is we are now voting upon.


Stanley Howard Knowles: Without introducing any
argument may I say, as the one who made the appeal, that in my view what we are voting on is a member's right, on the basis of a citation which I read from Bourinot, fourth edition, to the effect that a motion which contains two or more paragraphs can be divided-


Some hon. Members:: No, no.


Stanley Howard Knowles: Yes, that all the various paragraphs of a motion-


Murdo William Martin: May I seek to help the chair. I think what happened was this. The leader of the opposition (Mr. Drew) made a motion that we consider the matter before the house item by item. That motion was defeated, whereupon the hon. gentleman-


Stanley Howard Knowles: It was out of order.


Murdo William Martin: -whereupon the member for Winnipeg North Centre (Mr. Knowles) got up and argued the merits of the question.

Excise Tax Act


Stanley Howard Knowles: Claiming my right on the basis of the citation.


Paul Joseph James Martin: He argued the merits of the question. After he had finished his argument, I rose and said that I did not want to interrupt my hon. friend, but he was clearly out of order because the house had already decided the very question he was seeking to urge the house to adopt. Then the member for Lake Centre (Mr. Diefenbaker) spoke, as well as several others. I rose again and said that surely the motion had been proposed toy the leader of the opposition and had been dealt with. If that motion was to be taken seriously the whole subsequent discussion was out of order. The chairman then said, "Yes, that is my position." The member for Winnipeg North Centre said, "I appeal your ruling."


Donald Methuen Fleming: A very unfair presentation, and inaccurate.


Mr. Speaker:: Order. The chairman of the committee of ways and means has reported that a vote having been taken on the motion that the excise tax resolution should be considered item by item, and the vote on the said resolution having been in the negative, the chairman ruled that it was not open to a member to ask that the resolution be considered item by item.


Stanley Howard Knowles: I appealed against the
propriety of that vote.


Mr. Speaker:: Those in favour of confirming the chairman's ruling will say yea.


Some hon. Members:: Yea.


Mr. Speaker:: Those opposed will say nay.


Some hon. Members:: Nay.


Mr. Speaker:: In my opinion the yeas have it, and I declare the ruling of the chair confirmed.
Breithaupt
Brisson
Brown (Essex West)
Bruneau
Cannon
Carroll
Carter
Cauchon
Chevrier
Cloutier
Corry
Cote (Verdun-La Salle)
Cournoyer
Darroch
Dechene
Decore
Demers
Dewar
Dickey
Dube
Dumas
Eudes
Ferrie
Follwell
Fournier (Hull)
Fournier (Maisonneuve-Rosemont)
Fulford
Garland
Gauthier (Lake St. John)
Gauthier (Lapointe)
George
Gibson
Gingras
Gosselin
Gour (Russell)
Gregg
Harris (Grey-Bruce)
Healy
Hellyer
Helme
Hetland
Hosklng
Howe
Huffman
Hunter
Jeffery
Jutras
Kent
Kirk (Digby-Yarmouth)
Lafontaine
Laing
Langlois (Berthier-Maskinonge)
Langlois (Gaspe)
Lapointe
Larson
Lefrancois
Leger
Lesage
Little
Macdonald (Edmonton East)
MacDougall
MacKenzie
MacLean (Cape Breton North and Victoria) McCann McCulloch
McDonald (Parry Sound-Muskoka)
Mclvor
McLean (Huron-Perth)
McWilliam
Major
Maltais
Martin
Monette
Mott
Murray (Oxford)
Mutch
Proudfoot
Prudham
Richard (Gloucester)
Richard (Ottawa East)
Riley
Rinfret
Roberge
Robartson
Robinson
Rousseau
St. Laurent
Simmons
Sinclair
Sinnott
Smith (Moose Mountain) Smith (York North) Stewart (Yorkton)
Stick
Studer
Tremblay
Valois
Viau
Ward
Warren
Weir
Welbourn Whiteside Winkler Wood-122.
++NAYS
Messrs:
And more	than jive members having risen:		Adamson	Fleming


Mr. Speaker:: Call in the members.	Argue	Fraser
			Aylesworth	Fulton
The house	divided on the question: Shall	Beyerstein	Gillisthe ruling of the chairman be confirmed? And the ruling was confirmed on the following	Blackmore Blair Brooks	Goode Graydon Greendivision:	Browne (St. John's West) Harkness	Bryce	HatfieldYEAS	Cardiff	HerridgeMessrs:	Casselman	HodgsonAbbott	Catherwood	JonesBlack (Chateauguay-	Charlton	KnightAnderson	Huntingdon-Laprairie)	Coldwell	KnowlesApplewhaite	Blanchette	Courtemanche	LennardAshbourne	Blue	Coyle	LowBalcom	Boisvert	Diefenbaker	Macdonnell (Greenwood)Bater	Boivin	Drew	MaclnnisBeaudoin	Boucher	Fair	McGregorBenidickson	B our get	Fairclough, Mrs.	MurphyBertrand	Bradley	Ferguson	Noseworthy
[Mr. Martin.l

Nowlan	Stanfield
Pearkes	Thatcher
Poulin	Tustin
Quelch	Wright
Shaw	Wylie-52.


Mr. Johnston:: I was paired with the hon. member for Halton (Mr. Cleaver). Had I voted I would have voted against confirming the chairman's ruling.


Mr. White (Middlesex East):: I was paired with the hon. member for Middlesex West (Mr. McCubbin). Had I voted I would have voted against confirming the chairman's ruling.
And the house having resumed in committee:


Stanley Howard Knowles: Mr. Chairman-


Mr. Browne (St. John's West):: Mr. Chairman-


Joseph-Alfred Dion: The house again in committee of ways and means.


Stanley Howard Knowles: With respect to the resolution now before the house-and I take it we have to accept the ruling that has been made, that it is one resolution-I wish to move an amendment. I move my amendement on the basis of citation 500 in Beauchesne, third edition, and also on the basis of a similar amendment moved on March 22, 1948, after a similar occurrence to that we have just been through. On that occasion the amendment was allowed. It was voted down, but nevertheless it was allowed; and I have worded my present amendment in precisely the same form.
I move:
That clause 1 of the proposed resolution be deleted and that the following be substituted therefor:
That it is expedient to introduce a measure to impose an additional tax on spirituous liquors to the extent necessary to maintain the balance of ways and means."
The effect of that amendment is I am sure quite clear. By deleting paragraph 1 of the resolution before us we reduce the income that it was proposed by the Minister of Finance to raise, by increasing the sales tax. Therefore since it is necessary for me to propose a tax that will maintain the balance of ways and means, I propose that whatever that amount was should be raised by an additional tax on spirituous liquors.


James Sinclair: In previous years similar motions have been moved. They have always been ruled out of order, when they were moved in such general terms. Every other tax resolution moved at this time is couched in specific terms as to what the rate of taxation will be. It is not specific enough for the committee to accept a blanket amendment such as that now offered, which states
Excise Tax Act
only the purpose of increasing the tax on liquor. I know, because of action taken in previous years, that it cannot be in order.


Stanley Howard Knowles: On the point of order raised by the parliamentary assistant, I should like to read the citation and the previous amendment which I drew to your attention when I was on my feet before. Citation 500 of Beauchesne, third edition, reads:
Though It is the function of the committee of ways and means to impose rather than to repeal taxes, examples of the repeal of taxation effected1 in this committee are to be found upon the journals. Proposals for the variation or modification of taxation can therefore be made in the committee, but these proposals must be grafted upon the financial scheme submitted by the government, and must not affect the balance of ways and means voted for the service of the year. Amendments, therefore, can be proposed to substitute another tax, of equivalent amount, for that proposed by the government, as, for instance, a proposal to substitute probate and legacy duty on real property as an alternative for an inhabited house duty, the necessity of new taxation, to that extent, being already declared on behalf of the crown.
Again that citation which appears in Beauchesne, third edition, was taken by him from pages 543 and 544 of May, thirteenth edition. As I indicated before, the last time we had an incident like this was on March 22, 1948. I need not rehash now what we went through at the earlier stage of that event because we have done it all over again today. The discussion was then resumed in committee on what was then declared to be of necessity one complete resolution. An amendment was moved by the member for Winnipeg North Centre-I had forgotten I had moved it, but Hansard reminds me that I did-and on page 2490 of Hansard of March 22. 1948, I am reported as follows:
I therefore move, seconded by my deskmate, the hon. member for Mackenzie (Mr. Nicholson):
That clause 1 of the proposed resolution as amended and clauses 2, 3 and 4 be deleted therefrom, and that the following be substituted therefor:
"That it is expedient to introduce a measure to impose taxation upon excess profits to the extent necessary to maintain the balance of ways and means."
The motion I have submitted today is in precisely the same form, is in the very same language. Since that other one was allowed by Mr. Golding, who was then in the chair,
I submit that it should be allowed on this occasion.


James Sinclair: There is a much more recent decision than that. Only last year the hon. member's deskmate, the hon. member for Melfort, tried to move a similar motion which was ruled out of order. In fairness to all other hon. members they should know exactly what increases this will mean in the tax on liquor. Is it going to mean two per cent, 50 per cent or 100 per cent? Surely this committee is not going to vote on a blanket

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proposal? If the hon. member had wanted to really move such a motion I think he should have made a little preparation and found out from the Department of National Revenue just exactly what percentage of increase in the liquor tax would be necessary to offset the loss of revenue through the removal of the sales tax.


George Alexander Drew: Mr. Chairman, I think that
what has just happened is of more than passing interest. The Minister of Finance is the particular minister to whom the parliamentary assistant is subordinate. A short time ago the Minister of Finance stated that his understanding was that a motion which called for the elimination of this sales tax and provided an alternative method of finding the money would be in order. The question is: Who is speaking for the Department of Finance? I think what we have seen now suggests a reason why the Minister of Finance should be conducting this procedure at this time.


Donald MacInnis: I just want to direct attention to the fact that the parliamentary assistant has said that a certain thing happened in this house but he does not produce evidence to show that the motion or amendment moved at the last session by the hon. member for Melfort was similar to the one moved today. We have only his assertion that such is the case, but you have before you as a precedent the amendment proposed in 1948 by the hon. member for Winnipeg North Centre which was allowed by a chairman who in my opinion knew the rules of this house pretty well.


Joseph-Alfred Dion: I would like to have had more time to examine this question, but in my opinion the amendment is in order and I shall put the question.
Amendment (Mr. Knowles) negatived: Yeas, 37; nays, 75.


Solon Earl Low: Mr. Chairman, now that the vote has been taken I should like to say a few words on section 1 of the resolution. I am unalterably opposed to the general sales tax, including the 25 per cent increase proposed in section 1 of the resolution, for five specific reasons. I am not going to repeat the arguments I put forward during the budget debate, but I do intend to outline again the five bases upon which I have taken my position.
I am opposed to the general sales tax and the increase proposed in section 1 of the resolution because this tax increases the cost of living burden upon the lower income groups of our Canadian people. That group

of people are already overburdened by a heavy cost of living which is continually increasing.
In the second place, I am opposed to the tax because it pyramids prices and makes it necessary for consumers to pay more in increased prices than is collected by the government in the form of revenue. I have already presented evidence by authorities who have investigated our Canadian sales tax and who show that often the consumer has to pay as much as 40 per cent more in increased prices than the government receives by way of revenue. This is iniquitous taxation; it is what the hon. member for Eglinton refers to as infamous and I do not support it for one moment, as* I have shown already by my vote.
The third reason why I am opposed to it is that the sales tax is inflationary. In times like these it aggravates a condition of inflation that is already very serious. On numerous occasions during the past several months the government has been asked by the people of Canada to take action to curb inflationary pressures. They had every reason to believe that the government would take such action during the present session. They looked to the budget as one place where relief perhaps could be given, but instead of any relief from inflationary pressures the government now proposes to impose a tax that is definitely inflationary, and there is no one who can prove that it is not.
The reason that I am opposed to the proposition of an increased sales tax is that the general sales tax is a hidden tax. I have always been opposed to hidden taxes because they take away from the taxpayers of the country any means by which they can gauge the effectiveness of the administration. There is only one way by which the ordinary taxpayer can judge whether a government is efficient and that is by the level of taxes. That is the barometer, and unless that level or barometer is plainly visible the people have no way whatever of knowing about the efficiency or inefficiency of the government. I am suggesting that one of the reasons why this government has attempted on several occasions to convert perfectly visible taxes into hidden taxes is that they want to hide inefficiency, and there is no one who can possibly present a case to disprove that statement. If so, I should like to have them try.
All information about the effect of the imposition of the sales tax has been hidden as well. The government has never attempted at any time to investigate the effect of the incidence of the sales tax upon the economy

to show whether or not there are adverse effects. We have called for it time after time in the name of the people. Ever since I came to this house in 1945 in nearly every session I have pleaded with the government to appoint some sort of commission to investigate the effect upon the Canadian economy of the incidence of the various taxes they are imposing so that we cam see what these effects are, and if they are adverse take action to remove these taxes and to correct the situation. I am asking that the Department of Finance, which is the proper department to do the job, should immediately appoint a commission to make a thorough investigation of the whole hidden tax situation. Let the country know exactly what are the effects of the imposition of the sales tax and other excise taxes.
The fifth reason why I am unalterably opposed to the imposition of this tax is that in many ways it increases the cost of production. However the argument may be presented, the fact remains that certain articles of machinery and certain tools used in the process of production, the many automobiles that are used in the process of production, the trucks that enter into the process of production, the clothing worn by labourers in producing things, and I could go on and name a number of other things, are affected by this tax. Therefore the prices of these articles will be increased if this imposition is passed and made law. That will inevitably increase the cost of production and further add to the inflationary situation in this country.
These are the five important reasons why I feel that it is unwise and iniquitous for the government to propose an increase in the sales tax particularly at this time when the people of the country are crying out against the terrible cost of living, when hundreds of thousands of our people, with all their backlog of wartime savings melted away, are just beginning to feel the pinch. People with children going to school cannot possibly get the vitamins and the food required to maintain the health of their children simply because of these iniquitous hidden taxes. I have had some experience with sales taxes, and my experience was not a very happy one. I administered the sales tax in the province of Alberta when I became provincial treasurer there, and I might state for the information of hon. members that after some little experience with it I decided it should be abolished. I did abolish it in 1937, and I have been opposed to such taxes ever since because I know something about what they
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do to people and how difficult this type of impost is to administer.
I sat and listened to the crossfire that took place when my friend the hon. member for Rosetown-Biggar was speaking. Certain members to my right and across the floor accused the Saskatchewan government of imposing a sales tax. They spoke as if that was every reason why the Liberal government should be supported in increasing the sales tax. Let me point out that there is quite a difference between the two taxes. The so-called sales tax imposed in the province of Saskatchewan is not properly a general sales tax at all. It is an ultimate purchaser's tax which is imposed at the consumer level as a straight percentage of the retail price to the consumer. When the consumer purchases the item he knows exactly what the cost ex tax is and he knows what the cost with tax is. That is an ultimate purchaser's tax. I am surprised that was not mentioned in the crossfire that took place because it is certainly an entirely different situation.
I think it is somewhat of an act of salvation that the provinces have not the right to impose sales taxes at the manufacturer's level. I am very happy that they have not. Certainly the people of Canada ought to be able to know exactly what they are paying in the form of taxes. If a system can be worked out at any time by which people will know when they buy an article how much they are paying in actual cost and how much they are paying in actual tax, I think it ought to be done. Such a system should be introduced.
I have taken part in the proceedings this afternoon with my vote. I have done all I can in a constitutional way, and so have my colleagues, to eliminate this vicious thing in order to protect the Canadian people who have not asked for this tax and in fact have demanded that it be not imposed. As I say, we have taken every constitutional means within our power thus far, but I am suggesting that, in spite of the overriding attitude and power of a power-drunk government, there is a remedy, and the opposition can apply that remedy. I suggest that we can prevent the government from putting this thing through. All we have to do is to fight and be ready to stand up here and talk this thing out. If the sixty or more members of the opposition will get their fighting clothes on and each one of them make a forty minute speech or two against it, we can at least hold this thing up until the people of Canada have a chance to tell the government that they had better remove the iniquitous thing or get out and let someone else come in who will do a decent job for them.

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If we have any intestinal fortitude on this side of the house that is exactly the sort of thing we will do. I suggest that is the remedy we have to apply against a party and a government that would override the wishes of the people as wantonly as this government does. I know my party are quite ready to do that very thing. As far as we are concerned it is the only remedy left to us. We are proposing to speak just as often as we possibly can, and if the opposition will band together I believe we can keep the government here until next Christmas and prevent this thing from being passed.


Mr. Lesage:: 
James Sinclair: The hon. member was good enough to warn me that he was going to raise this matter. The wording of the resolution provides for exactly the same type of division of taxation in the case of combinations as was done in the war years. When the bill is brought down the hon. member will see that on a combination stove of this kind the tax will be paid on that part of the stove which is the electrical attachment, and so with other combinations.


William Joseph Browne: I should like to raise a couple of questions with the parliamentary assistant. I do not think it is clear to the people of this country or to the members of this house whether these taxes are cumulative. We now have the sales tax raised from 8 per cent to 10 per cent. We also have the tax on certain articles increased from 15 per cent to 25 per cent. Would the parliamentary assistant be good enough to explain if that tax of 25 per cent is first imposed on the value of the article, and then the 10 per cent put on top of that. If that is so the amount of revenue raised will be much higher than would be the case by the two per cent increase we are talking about. As I understand it the goods that come under schedules I and II of the Excise Tax Act are liable to this tax of 25 per cent, and of course that includes a great range of articles. I do not know whether the parliamentary assistant tabled a list of those articles today; I missed what he said at the beginning of the session. Was a list put on Hansard?


James Sinclair: I would be quite willing to put it on Hansard, as was done in the last two years. The question is whether we should duplicate in Hansard what will be in the bill.


William Joseph Browne: I am not
asking that it be done, but the list does include a great number of electrical articles, golf clubs, fishing rods, cameras, phonographs, and so on. If I am right in my assumption, an article which cost $100 and was subject

to a tax of 15 per cent would then cost $115. The 8 per cent on that would raise it another $9.20, bringing the total to $124.20. Of course that total would be greater now that the taxes are 25 per cent and 10 per cent. I see the parliamentary assistant shakes his head. Section 80 of the Excise Tax Act says that these excise taxes shall be levied. Then section 86 says that there shall be levied a sales tax, now to be 10 per cent. In the introductory section, section 85, this is the definition of sale price:
"sale price" for the purpose of calculating the amount of the consumption or sales tax shall mean the price before any amount payable in respect of the consumption or sales tax is added thereto . . .
Then we come to the duty paid value: "duty paid value" shall mean the value of the article as it would be determined for the purpose of calculating an ad valorem duty upon the importation of such article . . .
So when an article comes in it pays the duty, then it pays the sales tax on top of the price plus the duty. I think that is right. In regard to an article manufactured in Canada that has the excise tax rather than the customs duty charged to it, is the 10 per cent charged on that?
I have one more question before I sit down; the parliamentary assistant might as well deal with both at the same time. In regard to tea, coffee, and cocoa, which I think are regarded as necessities just as other items of food, are these subject to customs duty and in addition to sales tax?


James Sinclair: I shall answer the points in order. The sales tax and excise tax are applied on the same basis. The excise tax is not applied to the cost of the article plus the sales tax. There will be an amendment in the act which we are bringing down as a consequence of this resolution, in which it is clearly spelled out what the sale price will be. These taxes are not cumulative. So far as the duty on tea, coffee, and cocoa is concerned, if the hon. member will wait until the customs tariff resolution is before the committee I shall have the answer. The sales tax applies on tea, coffee and cocoa.


William Joseph Browne: On the duty-paid value?


James Sinclair: On the duty-paid value.


Mr. Quelch:: I believe I shall discuss the whole resolution at once, and not merely a section or two at a time. The thing that puzzles me, and I think it is puzzling the people of Canada, is that ever since I have been in the house the Liberal party has bitterly denounced the policy of inflation as being a dishonest policy, as being a policy
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which steals the savings of the people without disclosing it. And now the government has adopted this policy. They have adopted this policy as a means of bringing in a greater amount of revenue. As a result of this policy there will be an increase in the price of many commodities, and to that extent the policy is inflationary. True, it will bring increased revenue to the government, .and no doubt the government hopes, as a result of the increase in prices, that there will be a reduction in the demand for goods from current income. Even though there may be a reduction in the demand from current income, the minister knows very well that it may not necessarily mean a reduction in demand because, instead of that, people will save that much less. People will also use their savings of the past in order to finance current expenditures.
I noticed a press dispatch in the Ottawa Journal of April 24 which is headed "Inflationary trend seen in new taxes bank review says". It reads:
The current "Business Review" of the Bank of Montreal says that the new taxes provided in the federal budget will doubtless supply funds for soaring defence expenditures, but it finds in them possible inflationary influences.
It adds:	"To point out these difficulties is not
to suggest that practical alternatives were readily available."
The analysis says in part: "In theory it is possible to limit or reduce the level of consumption, in real terms, by budgetary measures operating on the incomes and spending propensities of individuals in the mass.
"But in practice the actual results may be greatly modified by public reaction and the bargaining power of organized groups. For example, the new surtax on incomes will, at midyear, have the initial effect of reducing the take-home pay of that proportion-probably less than half-of the working force now on the income tax roll.
"To some extent the increased tax is as likely to be met by a reduction in savings as by diminished consumption. Moreover, the likelihood of the restraining effect of the tax being in large part offset by subsequent additions to take-home pay is considerable.
"The new indirect taxes-i.e., the increased sales tax and the specific excise taxes1-are, in an economic sense, designed' as a penalty on spending. The imposts will emerge as increases in the prices of the articles affected, with the possibility of the increases in many instances being 'pyramided' by the mark-ups applied by intermediaries between manufacturer and consumer.
"Beyond the range of necessities it is, of course, the option of the consumer to refrain from purchasing the affected articles. But in any event the higher prices will in due course be incorporated into the cost of living index, which is not only the reference point to which basic wage rates are contractually tied in some industries, but which is also a significant symbol indicating, in the eyes of the public at large, the degree to which demands for higher pay are automatically justified . . .
"In the ultimate analysis the effectiveness of budgetary measures as a curb on consumer spending depends on the willingness of the public to permit its spending to be curbed rather than to seek compensatory pay increases."

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As is pointed out there, as a result of the increase in the cost of living, the result will probably be a demand right across the country for an increase in wages, which will still further increase the inflationary pressure in this country. I would agree, perhaps, that in so far as a long-term policy is concerned, the budget resolutions may tend to reduce purchases by increasing the cost of living; but whatever the long-range policy may be the immediate effect is to increase prices by an amount at least equivalent to the amount of the sales tax or excise tax. The actual amount of the increase will be greater than the amount of the sales tax because it will be pyramided in mark-ups.
I wonder if the parliamentary assistant would admit that the result of this policy will be to tax the savings of the people in the lower income groups and in the moderate income groups? It will not be a tax on the savings of the people in the higher income brackets, because they will have enough current income to meet the current costs of the goods they buy. But there are many people in the lower income groups who cannot meet the cost of living from their income, and who will therefore have to use their savings. In reality this is in part a hidden tax on the savings of the people in the lower income group.
I see it is six o'clock, Mr. Chairman.
At six o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at eight o'clock.
Victor Quelch: Just before six o'clock, Mr. Chairman, I had been pointing out that for many years now the government has been warning of the dangers of inflation and stressing the fact that a policy of inflation is a policy of dishonesty, a policy under which in reality the savings of the people are filched away. I therefore deplore the fact that the government has now come to the conclusion that it is necessary for them to adopt that same dishonest policy which they have so severely condemned in the past. I quoted from the current review of the Bank of Montreal, which showed clearly and unmistakably that the result of this present budget policy was bound to be one of inflation, or at least that it had highly inflationary tendencies and would probably lead to an all-round increase of wages, which would mean a still further increase in prices.
I also pointed out that one of the most unfortunate results of this policy is that people in the low income groups are not

able to meet the present high cost of living out of their current income and therefore, where they have any savings or any capital, they are drawing on those savings or on that capital in order to supplement their income for the purpose of meeting the high cost of living; and of course they are having to pay these taxes out of those savings. Hence this policy of the government actually is a concealed tax on the savings of the people in the lower income groups. It will not affect the savings of the people in the higher income groups to the same extent, because they will be able to live on current income; but the people in the low income groups who are fortunate enough to have savings will have to utilize them and then pay these taxes.
Many people across the country are wondering how it is that the government is still refusing to take any direct action to control prices. I have come to the conclusion that the government is not interested in reducing prices for the simple reason that they realize that the higher prices go, the higher will be their revenue at any given level of taxation; that is to say, they can get an increase in revenue without increasing taxation so long as they allow prices to rise. In that way they get more revenue and let the people blame industry for the increase in the cost of living instead of themselves accepting a large part of that responsibility.
I think it is generally understood that in normal times high taxation will cause demand for goods to fall off; and as you have demand falling off, unemployment increases and prices fall. That is the orthodox idea and that is, I think we will all agree, what happens in what you might call normal times. But these are not normal times. Already they have been referred to as times of emergency. We therefore realize today that any slackening in internal demand will be taken up by increased external demand and that therefore, instead of demand falling off and unemployment increasing, external demand will take the place of internal demand and keep demand high, and the inflationary pressure will continue even with the increased prices for goods.
How long can we expect this situation to continue? The government appears to look upon it as a temporary situation, or perhaps I should say they hope that it is a temporary situation; because the Minister of Finance stated that perhaps next session they may have to bring in other measures.
What is likely to be the future situation? There are one or two alternatives. The cold war may continue. If the cold war continues, it means we are going to have

continued high expenditures for defence. The Minister of Trade and Commerce I think made that quite clear when he spoke. So long as we continue to have high expenditures for defence, there will of course be a heavy demand for materials manufactured in Canada. In addition, so long as this cold war continues there will be, for food produced in Canada, a heavy demand by members of the North Atlantic treaty and also by various countries in Asia that we are obliged to support under the United Nations organization. If therefore we are going to continue to have the cold war for the next five or six years, we are going to continue to have inflationary pressure.


The Deputy Chairman:: Order. I have considered the matter carefully, and I entertain doubts as to whether the hon. member should, while discussing this resolution, go into the matter of the opinion of the government on what it considers to be a short-term taxation program. The rule is that remarks must be strictly relevant to the resolution. On looking over some of the citations on the subject in Beauchesne's, I saw one, citation 489, third edition, to the effect that a member was declared out of order because he was discussing the branches of the main line of a certain railway company which was then under discussion in committee. I think the hon. member is now going much farther than the member mentioned in the citation, when he was discussing branches of the line when expenditures for a certain railway company were before the committee for study. I should like the hon. member to consider that citation 489, Beauchesne, third edition, seriously and govern himself accordingly.


Victor Quelch: Yes, Mr. Chairman. I will try to make myself clear in the future, because it is quite evident that I have not done so heretofore or you would not have made that observation. What I am trying to show is that the taxation that is being brought down in this budget-especially excise taxes-is causing an increase in the cost of living; that, as the result of increased taxation we would normally expect demand to fall off, unemployment to increase and prices to fall; but that, owing to the international situation, even though internal demand falls off, external demand is increasing, and will therefore take the place of internal demand and consequently we shall no doubt continue to have a high demand for the goods we are producing. On that basis I quite agree with the minister-


Louis-René Beaudoin: Order. If the hon. member pursues that subject, in my opinion
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he will not be addressing his remarks to the resolution that is now before the committee.


Victor Quelch: I will pick up the resolution, read it section by section, and comment on it. Then at least I shall be in order, because I understand that at the present time the whole resolution is before the committee and not any one section. Section 1 reads as follows:
That the rate of the general sales tax be increased from eight to ten per cent and that the rate of sales tax on those articles at present subject to four per cent be increased to five per cent.
It was suggested that that tax should be eliminated; and the parliamentary assistant, among others, suggested that any time we advocated the elimination of a tax we should suggest an alternative. When the leader of this group spoke he mentioned that as an alternative there could be an increase in the tax on liquor. The Minister of Finance has argued that if we have an increase in the tax on liquor at this time we may very well reach the law of diminishing return. Well, if we reach the law of diminishing return, so far as liquor is concerned, would that not be a worth-while objective? Is the government going to take the stand that it wants to increase the consumption of liquor in this country? Would they not actually be doing something for the welfare and health of the people of Canada if, as a result of a tax on liquor, there was a reduction in the consumption of liquor in this country?
Therefore if an increase in taxation in this regard would have that result-and I am not saying that it would-but if such an increase in taxation would have that result, namely that it would reduce the consumption of liquor, then I would say we would be achieving a worth-while objective. Then, again, if the minister thinks an increase in the price of liquor would reduce the demand for it, and feels that in order to maintain the revenue from that source he would like to have an increase rather than a decrease in consumption, I suggest all that would be necessary would be to maintain the price of liquor at the present level and then increase the water content in each bottle. A person .would still be able to buy a bottle of liquor for the same price-but perhaps it would be a bottle with less kick. Some might say it would be less effective-but there, again, it is a matter of opinion. It might have less effect upon the person who drank it but the person would remain more effective than if the water content had not been increased.
I take the odd drink, but it would not worry me very much if such drinks were eliminated entirely. But I have seen strange consequences as a result of an over-indulgence in liquor. My mind always goes back to the

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last war when, one day, coming back from the front line, I came across one of my platoon commanders very busily shooting at a bath-mat. I know what he thought he was doing: he thought he was shooting rats. I was afraid he might mistake one of my feet for a rat, so I went ini the other direction. But the strange thing was that the next day that man did not remember having shot at imaginary rats; he had forgotten all about it. But he was having a fine time with his hunting expedition on rats-I suggest he would have been no worse off if he had not been able to get that liquor so as to indulge in his hunting spree. Some people are not satisfied with shooting rats; they go after pink elephants. If we were to put more water in the liquor they would probably be satisfied with mice, instead of elephants. I do not think it would be detrimental to the country if an increase in the taxation on liquor had the effect of reducing consumption. Indeed I believe it would be a good thing and would be beneficial to the country. The man with money, who wanted liquor, could still get it; people with less money would probably drink beer, and perhaps they would be better off. But it certainly does not worry me at all when the minister argues that an increase in the tax on liquor would curtail consumption, because I believe that would be a beneficial result.
Then the next paragraph in the resolution states:
That the excise tax on goods mentioned in schedule I of the act, and on furs, that are at present subject to the rate of fifteen per cent be increased to twenty-five per cent.
I understand this includes radios, household electrical appliances, cameras, cosmetics, cars and the like. I believe the minister has referred to most of those articles as being articles of luxury. I do not know whether the females of the species would regard cosmetics as luxuries: indeed I think a lot of them would regard them as an absolute necessity. I have no doubt in some cases they are a necessity.	.


An hon. Member:: Watch out.


Victor Quelch: After all, the aim and objective of many women is to catch their men, and certainly they could be more effective in hunting their men if they had cosmetics. I do not see why we should make it more difficult for persons in the low income group to get their men than it is at the present time.


Mrs. Fairclough:: Mr. Chairman, on a point of order, I feel really that I must categorically deny the accusation which has been

levelled against the women of Canada by the hon. member.


Victor Quelch: We all know the hon. member for Hamilton West would be absolutely exempted from anything I have said.
Then, on the question of cars:	surely no
one in the house-certainly no person from western Canada, and no person familiar with farming-would suggest for one moment that an automobile is a luxury, so far as the farmer is concerned. In the majority of cases it is a piece of equipment that is absolutely necessary-unless the farmer has a truck he can use instead of a car.
Even the income tax officials recognize that cars are essential equipment, because they permit a depreciation allowance to two-thirds the value of the car as deductible expenditure for income tax purposes. And the hon. member for Battle River suggests to me this question:	Why should the farmer's wife ride in a truck?


Mr. Wylie:: Let the hon. member for Hamilton West answer that.


Victor Quelch: And what about the working man who resides several miles from the city, and has to drive several miles to town so as to engage in his work? To that man a motor car is absolutely essential so that he may go to his job. Certainly the minister cannot argue, in the light of those facts, that a car is a luxury. It may be used as a luxury by some people; but to other people it is a piece of equipment that is absolutely essential to the jobs in which they are engaged.
Then, of course, those who use cars as a luxury would be able to buy them, despite the amount of the tax. It is the people in the lower income groups who will find it difficult to buy new cars, in the light of these taxes. No doubt some people will argue, "Well, people in lower income groups should not buy new cars; they should buy old cars." I am sure there are many hon. members who at some time or other have bought an old car, and have realized that old cars are not always the cheapest things to buy. Sometimes it is cheaper to buy a new one, because tremendous repair bills may pile up so that an old car becomes a liability rather than an asset-and people on low incomes are not in a position to afford heavy repair bills.
I know as a matter of fact farmers often find it is actually cheaper to trade in machinery after a few years; it is cheaper in time saved and cheaper from the standpoint of saving repair bills.

Then the fourth paragraph is in these words:
That there be imposed, levied and collected1 an excise tax of fifteen per cent on the following goods when adapted to household or apartment use:
(a) stoves, hot plates, grills and other appliances when adapted wholly or in part for cooking and when designed for using other than solid fuels;
As has been pointed out, while this does not include stoves that burn coal or wood, it does include electric stoves and gas stoves. Many houses are designed so that only gas or electric stoves can be used in them. Therefore it would be a hardship to people starting up in houses of that kind if they have to pay this tax on that type of stove.
Then the paragraph includes washing machines operated by electric or other power. I cannot understand how the Minister of Finance can possibly in any way regard a washing machine as a luxury. Wealthy people do not use them; they send their washing out, or at least most of them do. I suppose some of them use washing machines. But people who do their washing at home must have washing machines; I think all will agree on that. We do not expect them to use the washboard in these days. Because of this provision, and this additional tax, it will be more expensive for them to buy washing machines. Perhaps the minister wants people to stop using soap, because some of the ingredients of soap can be used in munitions.
The next paragraph reads:
(c) electric, gas or kerosene refrigerators and freezing equipment and complete parts therefor including coils, condensing or compressor units motors, cabinets, boxes, evaporators and expansion valves.
I can easily understand how many people would regard a refrigerator as a luxury, but on the other hand a refrigerator is a necessity in homes without basements if they are to eliminate spoilage. With the present high cost of food people cannot afford to have their purchases spoil and therefore a refrigerator is a necessity. Wartime houses have been built without basements, and certainly with a climate such as we have here in the summertime a refrigerator is a necessity if there is no basement. In western Canada many people live nine, ten, fifteen or twenty miles from town and they have to buy from week to week. In hot weather they find it hard to keep their food without a refrigerator.
I admit we have done it in the past, but in those days prices were not as high as they are today.
Apparently the Minister of Finance feels that the people who want these things should be prepared to wait. How long should people wait for these things? Is there any
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likelihood that prices will fall in the near future? During the last war and after the last war the people of Canada were asked to co-operate by refraining from buying these things I have referred to, things that were perhaps not considered to be absolutely essential. The Minister of Finance asked the people to stop spending their money on these things, to put it into bonds, and then later when prices had fallen and the goods were in more plentiful supply they would be in position to buy them. Many people co-operated with the government. Here is what the Minister of Finance said, as reported on page 1800 of Hansard of April 10, 1951:
We in Canada have already done a great deal. As I have said on previous occasions, this is not a matter in which government policies alone can provide a complete solution. It is a matter which requires the fullest co-operation of all sections and groups, in which every person has a part to play.
As I was pointing out, in the past many people did co-operate with the government. Those who co-operated by refraining from buying these things are the people who got it in the neck. The people who said, "Oh, to heck, with the government, I am going to buy a new refrigerator or a new stove or a new car," probably were able to buy forty per cent cheaper than they could today. The people who took to heart what the government was saying, that they should refrain from buying these things; those who said, "All right, we will co-operate, we will wait until they are more plentiful," found after they had waited two or three years that prices have continuously risen. Some stepped in at that time, but others kept on waiting and some are still waiting. Now they have either to continue waiting or if they want to buy, they must pay the already high prices plus this fifteen per cent excise tax.
How can the government expect co-operation from the people when they break faith in this way? Those people who listened to the government expected the government to play their part in keeping prices down. But those people who refrained from buying at the request of the government are now faced with greatly increased prices, plus this additional tax.
The people who are probably the hardest hit, the people for whom the Minister of Veterans Affairs should feel especially concerned, and I am sure he is, are the veterans.
I recall how at the end of the last war the Minister of Finance referred to the fact that after world war I there had been inflation, prices had gone up and the veterans coming home had to pay greatly inflated prices for the things they required. The former minister of finance, Mr. Ilsley, said that they did not intend to allow that situation to develop

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after the second world war. He said that they were not going to have the war veterans coming home and being faced with inflated prices.
What happened? The Minister of Veterans Affairs is probably aware of the fact that many veterans who wanted to buy land were advised by the Department of Veterans Affairs to wait until prices fell before buying land and equipment. In some cases they advised the veterans to wait for two years and in the meantime to work on farms to gain experience. What happened? In those two years, from 1946 to 1948, the price of a John Deere tractor increased from $1,800 to $2,800, and the price of land also soared. The result was that those veterans who had been advised by the department to hold off buying land and equipment had to pay 30 or 40 per cent more for what they wanted. In many cases the grants under the Veterans Land Act were swallowed up by the inflation that had occurred. I am sure that the government must feel deeply concerned about these men who could not help themselves.
Not even satisfied with that, apparently they are going to make the men in the armed services who are overseas pay income tax. However, I would be out of order if I discussed income tax at the present time.
I should like the parliamentary assistant to deal with the point as to whether or not these taxes are in reality a tax upon a large proportion of the savings of the people in the lower income groups who are not able to meet the high cost of living out of current income and are having to draw upon savings. This has been going on to quite an extent. I notice the February 1951 issue of the Canadian Statistical Review, at page five, states:
The increase in consumer expenditure was the principal factor accounting for a decline of four per cent in personal saving, from $802 million in 1949 to $769 million in 1950. If changes in farm inventories are deducted from the saving figures, a much greater decline in the rate of saving is indicated. Thus, personal saving, exclusive of changes in farm inventories, was $604 million in 1950, compared' with $875 million in 1949, which represents five per cent of personal income in 1950 compared with seven per cent in 1949.
As the situation deteriorates still further it means that not only will people not be able to save as much, they will actually have to draw upon their savings to meet the current cost of living, if they are lucky enough to have savings. We all know that there are many people who have already liquidated their savings. I know from personal experience and contact with many people that today they are cashing their bonds and various other capital assets in order to meet

current expenditures. In other words, they are living on capital rather than on current income.
As a result of this resolution they are now going to have to pay an additional tax on the savings they spend. I think the minister should deal with that point because it is a very undesirable feature.


Ellen Louks Fairclough: Mr. Chairman, before I deal with the more serious aspects of this resolution, perhaps I should assure thejion. member for Acadia that the women of Canada are not concerned about the tax on cosmetics.


An hon. Member:: The gals are.


Ellen Louks Fairclough: I doubt that, my friend; I doubt that. If all the cosmetics on the counters of all the drug and department stores in the Dominion of Canada were removed from those counters, the women of Canada would not be very greatly concerned.


John Lambert Gibson: They might not look so good.


Ellen Louks Fairclough: I think they would still look good to the men of Canada. As a matter of fact it has long been a matter of conjecture as to who gets whom, and I think at times that the women probably feel that a few cosmetics might not be amiss in the men's sections-


George Alexander Cruickshank: They taste very good.


Ellen Louks Fairclough: -of department stores and on the drug counters.


George Alexander Cruickshank: It would take more than that to wake up some of those fellows.


Ellen Louks Fairclough: I think probably the hon. member is right, but I do not think it is confined to any one section of the house or of the nation.


Louis-René Beaudoin: Order.


Ellen Louks Fairclough: However, Mr. Chairman, I must put in a word for the women of Canada and say that regardless of whether or not cosmetics exist, regardless of whether or not they are taxed, the women of Canada will still be happy in this country. To turn to more serious aspects of the resolution, I was impressed with the question this afternoon of the hon. member for Montmagny-L'lslet with regard to the tax that has been placed upon cooking equipment. He made quite a point about the difference between coal and wood stoves, and electric and gas stoves. Unfortunately I am not aware of the conditions that exist in the whole of Canada but I know that in the cities, particularly the larger ones, a great many apartment houses and practically all of the newer homes are simply not equipped to take any kind of cooking equipment other than gas or electric.


Gordon Knapman Fraser: They have no chimneys.


Ellen Louks Fairclough: As my friend says, they have no chimneys capable of taking the outlets necessary to wood or coal stoves. Therefore any tax placed upon a piece of electric or gas equipment is directly discriminatory against those women who are forced to buy equipment that must be connected to gas or electric outlets. I submit they are in the majority in the Dominion of Canada when you consider the size of the large cities and the many apartment houses, and old homes which have been converted into multiple dwellings, in which this is the only type of cooking equipment available to them.
The hon. member made quite a point of the fact that coal and wood stoves serve a dual purpose, that in addition to being cooking equipment they were als^ heating equipment. That may well be, but after all we cannot all eat cold food, we cannot all eat raw food. If these people are going to raise their families so that they will be healthy, if they are going to supply their men with the kind of meals that will fit them for a place in the production lines of this nation, they have got to have cooking fuel, and in a great many places today the cooking fuel is either gas or electricity in a large majority of the homes. I contend that the imposition of this tax upon any one class of cooking equipment is discrimination against women who are forced by circumstances to buy and use that particular type of equipment.
I was surprised to hear the parliamentary assistant say this afternoon that the increase in the sales tax had been deliberately imposed to levy a tax upon those people who would not under ordinary circumstances pay tax on their incomes because of the exemptions they ordinarily enjoy by reason of married status and the children they have. When I say I was surprised, I do not mean that I was surprised at the idea because I had rather thought that was the case all along, but I was surprised that the parliamentary assistant would admit it. I was surprised that he would admit that the government would impose an additional tax upon people who admittedly, by the government's own standards, do not earn enough money to maintain their families and pay a tax on their incomes.


Gordon Knapman Fraser: A tax on the poor.


An hon. Member:: Oh, oh.


Ellen Louks Fairclough: My hon. friend can laugh but that is true.


Mr. Richard (Otiawa East):: I am not laughing at anything the lady said, but I am laughing at the insinuation that you are the poor people's party.
80709-155J
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An hon. Member:: Cheap stuff.


Mr. Casselman:: Smart boy.


Gordon Knapman Fraser: Just because you represent St. James street -


Joseph-Adolphe Richard: Never saw it.


Ellen Louks Fairclough: I cannot recall that I made that assertion, nor can I recall that my hon. friend made that assertion. It is one that has been handed to us by the hon. member, and on behalf of myself I accept it. I think I know just as much about the problems of the poor people of this country as any member of this house, if -not more.


Some hon. Members:: Oh, oh.


Ellen Louks Fairclough: Yesterday in this house' I had occasion to agree one hundred per cent with the hon. member for Mackenzie when he said, as reported at page 2388 of Hansard:
This sales tax attacks the municipalities, who are not profit-making corporations, in the same way as it attacks profit-making corporations. The municipalities-the government of the country just the same as the federal government-are rendering service to the people, doing a lot of development work and! carrying a lot-of social services, which are rendered directly to the individual. If it is impossible to take the sales tax off such things as the machinery bought by the municipalities, then the government should give a grant in lieu of this tax to every municipality in Canada of 1,000 inhabitants or more.
During the afternoon and early evening we have heard a good deal of argument in reference to the impact of this tax on the families of this nation. The argument put forward so far has dealt largely with the increased cost of clothing and the various supplies required in a home, but I should like to direct attention to the fact that municipal costs are likewise paid largely by the homemakers. Every cent of the sales tax on supplies purchased by a municipality is paid out of real estate taxes or in rent, which has a direct relationship to real estate taxes, by those in this country least able to pay. No doubt hon. members are well aware that it has long been the contention of the association of mayors and reeves that the sales tax should be remitted on supplies purchased by municipalities, whether those supplies are machinery, hospital supplies, articles required by boards of education, or whatever they may be. In whatever category they may fall they are paid for by the people of the municipalities through increased real estate taxes.
I am sure hon. members have followed, as I have, the reports in the papers during the last couple of months. There may be some municipality in some obscure corner of this country that has lowered its taxes this year,

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but if so I have not noticed it. Almost every municipality has increased its tax rate to a substantial extent. This in turn is reflected in the amount that must be paid by the ordinary home owner to maintain his home before he even starts to buy food or clothing or any of the other things a family needs. To use a word that has been used already this afternoon and: evening, this is an iniquitous tax. I can do no more than beg the minister to withdraw this tax before it is too late, before the people of this country suffer to an extent beyond their endurance.


Mr. Fair:: I believe this house is indebted to the hon. member for Acadia for the light he has thrown on the effects of the budget proposals which are now before us. I believe many hon. members did not realize what would be the result when these various changes are put into effect. It seems to me that the Minister of Finance and his advisers should hang their heads in shame when they appreciate the effect this will have on the common working people of this country. Perhaps it is all right to sit in this chamber, to eat in our restaurant up on the sixth floor, to live at a big hotel here or in another city, and charge plenty for a day's work or for a half hour's work; but compare that with the conditions under which the little fellow has to live and the pay he draws for a full day's work. I believe these things should be taken into consideration before we proceed further with the budget proposals.
Many say the people like taxes. That is not the case; but apparently a lot of people go to sleep when election day comes around, because they keep putting the Liberals back into office. Then they have to pay heavier taxes and live on reduced earnings. But when the next election comes around they put the Liberals right back in, as I believe they have done today in Prince Edrward Island. I do not know why they do it. If I were a Liberal and had to support a thing like this budget, which many of them including the hon. member for Mackenzie do not believe in, I would get out of the Liberal party and stay out for good. Section 4 of these proposals reads:
That there be imposed, levied and collected an excise tax of fifteen per cent on the following goods when adapted to household or apartment use:
(b) washing machines operated by electric or other power.
When the parliamentary assistant replies to the questions which have been asked I should like him to make clear whether this "other power" is man power or woman power, or whether it is confined to gasoline engines and electricity. I ask that because we sometimes find that when these taxes are

being collected those who may be seeking advancement in their positions may interpret things in a way parliament did not mean when the resolutions were being considered,
I should like that matter cleared up when the parliamentary assistant is replying.


Mr. Bryce:: This budget leads me to believe more than ever what I said in the house some time ago, that the Liberal party of today is not the Liberal party of yesterday. When I was a boy the Liberal party protected the rights of the poor people, but this budget certainly does not do that. This increase from 8 per cent to 10 per cent is far too much. I was surprised at the remark of the parliamentary assistant that people could use the scrub board for a while longer.


James Sinclair: I did not say that.


William Scottie Bryce: Well, those may be my words but what you said had the same meaning. My wife had to use a scrub board, and I do not want my daughter to have to use it.


John Lambert Gibson: Why not? It won't hurt her.


William Scottie Bryce: The government of Manitoba has given us electricity, which we have been expecting for over twenty years. We promised the people there that they would get the appliances, and they made deposits on them. Now they are going to have to pay an extra 15 per cent. Is that a square deal? I have so many letters coming to my desk every day asking about these things, wanting to know what the Liberal government is thinking about. You are going to find out when you go back to the country the next time.


Mr. Blackmore:: Don't worry about that; they will be elected again. That is all they worry about.


William Scottie Bryce: It seems everyone wants to speak now that I have the floor. If everyone else wants to get after the government I will sit back and enjoy it. I want to say to the parliamentary assistant that the government should not put that 15 per cent tax on stoves and the other things that are necessities today. If you go back to the wood and coal stove, do not think you are being progressive, because that is a backward step. When you teach girls domestic science, you do not teach them on a wood stove or a gas stove, you teach them on an electric stove. You show them how to wash clothes in an electric washing machine. I appeal to you to put the excise tax back where it was, because it was heavy enough, and take the fifteen per cent off these appliances that the womenfolk of this country need.


John George Diefenbaker: Mr. Chairman, I feel that the parliamentary assistant would like to be answering some questions. I know he is most

desirous of answering a number of questions that have been asked of him, so I shall not make any lengthy speech at this time. I am most surprised that the members on the government side have not had something to say about this addition to the general sales tax. If ever there was an unjust and unconscionable tax to be imposed at a time of inflation, it is this additional two per cent. It is insidious and is resorted to because it is hidden. It has already resulted in an increase in the cost of living. It has done so in the case of gasoline and clothing. Shoes are going up, and all because of the fact that the government has joined in the merry-go-round of self-created inflation, its own home-made variety, by adding an extra two per cent. There is no amount of explaining that can get away from the fact that this tax is adding to the cost of living in this country, whatever the brain trust that advises the government may say. They find it an easy way to advise the government to take this means. I am not going to quote what other finance ministers have said, but I do point out that, at a time when the cost of living is going up as never before, the government adds to the speed of the merry-go-round by a sales tax. It does add to the cost of living. It does not affect those whose income is over $3,000 a year to the same extent that it does those whose income is under that, as the member for Hamilton West pointed out a moment ago.
There are a number of matters on which I desire information from the parliamentary assistant, and I am sure he will be able to answer because the dominion bureau of statistics has furnished some information in this regard. I should like to ask him how many dollars a year the ordinary family, covered by and comprised within the computation made in arriving at the cost of living, will have to pay in sales tax this year by reason of the addition of two per cent. I am speaking of the family with an income under $3,000 per year, for after all they are the ones that are generally taken into consideration in arriving at the index figures connected with the cost of living. I have endeavoured to compute this, and I think it comes to about $39 for a family per year.
Then, take the other items. How much will it cost such an ordinary family in respect of those goods covered by section 2, the excise tax on goods mentioned in schedule I? What will the cost be to this ordinary family, which I believe comprises four and a half persons, the average number that is taken into consideration in connection with the index number? How much will it cost them in respect of paragraph 4, the fifteen per cent excise tax on stoves, hot plates, grills, washing machines, refrigerators and the like? If we
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have that information we then have some idea as to the effect of these taxes. Certainly, these taxes are not going to be anti-inflationary. Their purpose can only be to secure revenue, their result a reduction in the ordinary standard of living among those in the lower income tax brackets.
I am going to give the minister an opportunity, before I say any more, to furnish the committee with this information because I am sure he has it all available. After all, before taxes such as these would be imposed by the cabinet, there must have been information secured from the bureau of statistics. I therefore give the parliamentary assistant the opportunity I know he is looking forward to of furnishing this information.


Charles Edward Johnston: Just before this item passes-


Gordon Knapman Fraser: Let us have this information first.


James Sinclair: I do not want to take up more time in this debate than is necessary, but I have a fair list of questions here which have been asked. First of all, however, I should like to reaffirm the position so far as sales tax and income tax are concerned. In the last year or so I have read back the budget speeches of every minister of finance since the end of the last war. I believe they have all faced this problem. Every minister of finance has agreed that the income tax is undoubtedly the fairest tax, and from the point of view of the lecturer in the classroom that it is the only fair tax. There is, however, a great difference between an academic discussion on taxes and the actual application to an issue. Every country has found there is a very practical limit so far as the application of income tax is concerned.
I am not going to quote any economic authority, but I am going to quote my little Scotch friend the hon. member for Selkirk. Three or four years ago he put a remark on Hansard which shows so well the reaction of people to an excessive income tax. You will remember that during the last war we had an income tax scale much heavier than we do now, and we had much lower exemptions. The income tax laws were beginning to be applied to farmers. My friend protested very bitterly about the extension of income tax to them, and told how a farmer in his riding had given up dairy cows and was going to continue as a wheat farmer. This farmer had said, "I willna milk cows for Ilsley"; that is the very effect of an aggressive income tax. In my own riding during the war we saw its effect in the form of absenteeism in the shipyards. Once a man's income got to the level where extra work put him in a high

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bracket, he said it was not worth while working. They have certainly had that same experience in Britain.
Some of you will recall that last spring I had the opportunity of going around Europe in connection with the collection of war debts. I was quite impressed with a talk I had with the minister of finance of Belgium. The Belgians have recovered more quickly than any other European people. They have worked very hard. He said that one of the incentives they had given the people to work hard was a low income tax rate. The people who worked overtime got most of the extra money, and spent it on consumer goods which were taxed. It is true that the Belgian government got more revenue by means of much heavier excise taxes and sales taxes than the British had. In Britain they have a very heavy income tax rate. When a man did have a little money left after income taxes, he found there was nothing on which he could spend it. He could not buy more food because it was rationed, more clothing because it was rationed. He could not get extra material to extend his house, because it was in short supply. A government is faced with the hard fact that, if it cannot rely solely on corporation and income taxes for raising revenues which it needs, there is a very practical limitation.
During the last two or three years hon. members will recall that there has been no absence of suggestions from opposition members for more Pacific pacts, more Colombo plans, and for bigger national defence expenditures; all those things have to be paid for. Turning to the practical point of diminishing returns, as to not just taxes but productivity throughout this nation, it can be fairly quickly reached and it would be reached overnight if we tried to impose the entire load of taxation on income tax. Since this country has had both income taxes and indirect taxes, we have had to try to maintain this almost even balance between our collections of direct tax and our collections of indirect tax.


An hon. Member:: Answer the question.


James Sinclair: I have plenty of answers here, if the hon. member will just bide his time. There has been talk here by the lady member for Hamilton West implying that I said that the sales tax was our method of taxing the poor. The sales tax is paid by all those who buy those materials. The income tax of this country has of course a direct relation to our tax program. I have here a table which I intended to put on the record when we were discussing the personal income tax. It is one showing that this country has higher income

tax exemptions than have the other two countries with whom we can reasonably compare ourselves, namely, the United States and Great Britain. Here in Canada we have income tax exemptions as follows: for a single man $1,000; for a married man, $2,000. Perhaps I should go right across the board. For a single man, $1,000 in Canada; $600 in the United States and $319 in the United Kingdom. That is at $2.90 to the pound. The United Kingdom will show one or two other provisions which I will mention when I come to the table. Exemptions for a married man: in Canada, $2,000; in the United States, $1,200 and in the United Kingdom $551. Children receiving family allowances are given exemptions of $150. If they are not in receipt of family allowance, they are given exemptions of $400. There is no family allowance in the United States. Children get a $600 exemption. In Britain, whether the child receives family allowance or not, he receives an exemption of $203. The family allowance in Britain is taxable. The British allow a further exemption of 20 per cent on earned income.
I want to give a specific example. I said a little earlier this afternoon that today in Canada we have 5,200,000 people gainfully employed, of whom only 2,200,000 pay income tax. That is because of these high levels of exemptions. I will take the example of a man earning $3,000 a year, because that was the figure mentioned by one of the speakers.


Stanley Howard Knowles: Mr. Chairman, may I raise a point of order, and I do not do so in any vindictive spirit. I would just like to have things clear. A short while ago, when the hon. member for Acadia seemed to you to get a little bit beyond the scope of the Excise Tax Act, Your Honour insisted that he get back to the discussion of that act. The parliamentary assistant is now getting completely away from the Excise Tax Act resolution.


An hon. Member:: It is a question he was asked.


Stanley Howard Knowles: Just a minute. The parliamentary assistant is discussing the Income Tax Act. I should just like to know whether that procedure can be construed as being in order, so that the rest of us can enter into the same discussion, or might it not have been better if the parliamentary assistant had withheld what he is now giving, as he said he intended to do, until we came to the other measure?


James Sinclair: If I may speak to the point of order, I should like to say that I am not discussing income tax proposals. But the hon. member for Hamilton West, in her remarks, mentioned the income tax exemption and-


Ellen Louks Fairclough: No.


James Sinclair: -that I have made the statement that the sales tax was our tax on the poor.


Ellen Louks Fairclough: I said nothing at all about income tax exemptions; but inasmuch as the parliamentary assistant has mentioned the matter, I should like to make a remark on his assertion that the exemption is $150 for children where their parents receive the family allowance. That is not the case. The $150 is allowed where the parents are eligible for family allowance, whether or not they receive it.


Louis-René Beaudoin: Order. I think the point of order raised by the hon. member for Winnipeg North Centre is well taken. I heard the parliamentary assistant premise his remarks by quoting some assertion made by the hon. member for Hamilton West and I thought he was replying to that. Now that this misunderstanding has been cleared up by what the hon. member for Hamilton West has just said, I will have to ask the parliamentary assistant not to discuss this broad picture of inflation or the cost of living, and not to refer to income tax on the excise tax resolution.


John Horne Blackmore: Mr. Chairman, I greatly regret that the hon. member for Winnipeg North Centre saw fit to raise this point of order. After all, we are discussing the question of the expediency of passing these measures. "Expediency" is a fairly broad word, and it applies fairly well all over the economy. I submit that the parliamentary assistant was completely in order because he was endeavouring to justify the application of this sales tax, having regard to the ability of those in the lower income brackets to pay, in comparison with that of those who pay income tax. I cannot see how we can more fully be discussing the "expediency" of the measure than by doing exactly as he has done. I submit to Your Honour that any attempt to limit too strictly discussion with regard to the expediency of this measure will render the discussion a complete farce.


Louis-René Beaudoin: I think the hon. member should realize that there should be just one ruling with regard to any one measure and that the ruling should apply to every hon. member. A moment ago I called the hon. member for Acadia to order because
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he was taking too broad a view of the resolution and going outside it. The hon. member for Winnipeg North Centre has now raised a point of order which I have just ruled was correctly raised. I shall therefore have to insist that this rule be observed. The hon. member refers to the expediency of the measure. The resolution reads:
Resolved, that it is expedient to introduce a measure to amend the Excise Tax Act and to provide: Paragraph 1 . . . .
And then specific provisions are set out. That is what is to be considered, and the remarks must be strictly relevant to each paragraph of the whole resolution which is now before the committee, on the various items which are to be amended or repealed or whatever the case may be.


James Sinclair: I bow to your ruling, Mr. Chairman, because there will be opportunity under the personal income tax resolution to discuss this matter. I shall confine myself now to answering questions which have been raised by various members opposite.
The hon. member for Acadia spoke at some length about liquor taxation. I should like to point out what has already been said by the minister, what was said by myself on the budget speech, and what has been said by Premier Frost, namely that as far as liquor taxation in Canada today is concerned, we have come to the point of diminishing return. He asked whether we were interested in the control or the handling of the liquor business. The federal government is not in the liquor business. The control of liquor is in the hands of ten provinces. But when Premier Frost, speaking in the budget debate in the provincial legislature, said that any increase whatsoever in liquor taxes would result in the province of Ontario having a $10 million deficit this year, you can see that the point of diminishing return has been reached. There is some more than that, though, in connection with liquor, because it encourages the breaking of the law, bootlegging and moonshinimg; and as Premier Frost pointed out, the problem of enforcement was a provincial matter.
As to the suggestion that this act should replace the sales tax, during the dinner hour the national revenue people made a rough calculation. It would need a 300 per cent increase in our present scale of taxation on liquor, the highest we have ever had, a scale of taxation we have never cut back even from the last war, but which we raised in the baby budget last fall. As I say, it would require at least a 300 per cent increase in liquor taxation, provided there was no diminishing return. That is, our tax would be

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at least $36 a gallon. That shows how impractical a suggestion like that is with regard to finding the necessary revenues.


John George Diefenbaker: How many gallons does that take into consideration? In arriving at $36 a gallon, I am interested in knowing how many gallons that would be.


James Sinclair: National revenue do not charge on the type of products sold at the stores. They charge $36 a proof gallon; that is, a proof Imperial gallon. The ordinary quart sold at the liquor store is not a real quart. It is one-fifth of a quart less.


An hon. Member:: A dollar a gallon.


James Sinclair: It is not the federal government. It is the provincial government that do it as a business operation. This is no conflict in taxation between the provinces and the federal government. The federal government has a right of taxation here. The provinces are in the liquor business. It is, after all, taxation on their business to which they are referring.


Agar Rodney Adamson: Does not the federal government enforce the 30 per cent underproof?


Douglas Charles Abbott: No; only during the war.


Agar Rodney Adamson: Has that been washed out? Then provincial governments could sell whisky that was not 30 per cent underproof?


Douglas Charles Abbott: Yes.


James Sinclair: The liquor controllers meet
each year and decide on a common national policy in that respect.


Gordon Knapman Fraser: How many gallons does that
take into account when arriving at the $36 per gallon?


James Sinclair: Last year the revenue from liquor taxes was $61 million. To raise another $125 million would require, in effect, $36 a gallon tax, instead of the present $12 tax.
Then, to go on to the next point, the matter of the tax on cars, washing machines and refrigerators. Hon. members across the way seem to be trying to leave the impression that the only reason we are taxing them is because they are regarded as luxuries. They are not luxuries. The Minister of Finance and the government are faced with the problem of raising an extra $400 million, and faced with the problem of placing that tax load on the Canadian people as fairly. as possible.
I said when I spoke last week that, so far as this particular paragraph is concerned, referring to power washing machines, refrigerators and electric stoves, they are

goods with an especially high content of materials needed for defence, not only steel but copper. I put the striking analysis of the Anaconda Copper Company on the record, as well, to show the essentiality of those materials.
The Minister of Finance also mentioned the amazing rate of spending on these items. On the point raised by the hon. member for Battle River with respect to washing machines operated by electrical or other power I would say that the intent of that is that it is mechanical power.
Then the hon. member for Lake Centre asked a series of questions as to the actual amount of tax paid by the low income family. At the beginning of the session I placed on record an analysis made up by the dominion bureau of statistics respecting goods in various categories, and showing family purchases over a variety of incomes.


John George Diefenbaker: But that does not
answer my question. Has the parliamentary assistant any record or has he secured any record from the dominion bureau of statistics setting out how much the increase in the sales tax, as shown in the first paragraph of the resolution, will add to the cost of living of the average family with an income under $3,000? I have reason to believe that that information is in the possession of the parliamentary assistant. That is what I am trying to find out-how much the general sales tax will increase the cost of living of the average family he has used as a model, and in respect of which the cost of living index is arrived at. That information must be available, and I think it would be most interesting if it showed exactly the degree to which the sales tax will impinge upon those in the small income tax brackets.


James Sinclair: Well, I think the table I put on record today shows that picture. Perhaps it does not show it in exactly the way the hon. member wants it. What the hon. member asks would not be a matter for the Department of National Revenue, but rather for the dominion bureau of statistics, with its sampling of average families of various income groups across the country. That is not the type of work done by the Department of National Revenue.


John George Diefenbaker: But there must be some collaboration between these departments.


James Sinclair: I will endeavour to have that information ready when the Excise Tax Act bill is before the house.


John George Diefenbaker: And also, the information on paragraphs 2 and 4-those three paragraphs.


James Sinclair: Yes.


John George Diefenbaker: Because it will show directly, as a result of the examination by the bureau of statistics, how much these new taxes are going to interfere with the standard of living of those in the low income tax brackets, who have nothing left today. They are the people who, more than anyone else, are directly affected by this injustice of imposing a sales tax at this time.
On the one hand you have a government with a realization of the cost of living going up, at a rate never before equalled, and on the other hand you have a government adding to the fires of inflation by adding a sales tax on necessities at this time.
Mr. Chairman, for the life of me, I cannot understand what justification there is for this tax at the present time. I shall ask the parliamentary assistant a simple question: does he in any way suggest or does the government suggest that the imposition of this sales tax at the present time, and also the excise tax on stoves, washing machines, electric or kerosene refrigerators, and so on, is going to contribute anything to meet the onrush in the increase in the cost of living? Will this do anything like that? If it will not, then it is one of the most serious things the government could possibly do at this time. They are actually creating their own internal inflation by the taxes they impose.
Then I hear the parliamentary assistant talking about Colombo. That apparently is one thing that is referred to by him to account for all the extra taxation. The government announced in January that $25 million was going to be voted for Colombo- part of our defence requirements; that, in effect, is what it is. The $25 million is to be used for the purpose of containing communism, and seems to be the one thing my hon. friend keeps returning to, with monotonous regularity, to explain all additional taxes.


Stanley Howard Knowles: Is he for or against it?


John George Diefenbaker: I will ask that question:
does he believe that $25 million should be given under the Colombo plan? I ask that because for the last several days, over and over again, he has referred to it.


James Sinclair: And the reason I have
referred to it is that I not only believe that $25 million should be given, but I am willing to support the tax necessary to pay it. I am unlike the hon. member who goes on the air and says we should be giving $50 million to Colombo, and then comes to the House of Commons and opposes all the tax measures which are necessary to pay for this project.


John George Diefenbaker: Mr. Chairman, as a
matter of fact no one had spoken of the $25
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million contribution by Canada to the Colombo plan when I spoke on the radio. It was only after I had suggested an expenditure should be made, in consequence of the experience you and I had recently-it was only after that that the government announced the $25 million; and I agreed that that was sufficient for the purpose. Never did I mention $50 million after the government decided to advance that amount of money, after playing with the problem from September last until we, on our side of the house, felt it was one thing that should be done. And then the government finally decided that it was going to make a contribution.


An hon. Member:: You said in Quebec it should be made.


Louis-René Beaudoin: May I suggest that we return now to a discussion of the excise tax?


John Lambert Gibson: May I suggest that when the parliamentary assistant is having figures prepared he might also have prepared the expenditures of the average family on tobacco and liquor.


James Sinclair: This table which I indicated contained a breakdown of expenditures of families at different levels for these items of tobacco, alcoholic beverages and the like. And when I say I am trying to get that information, I must say I do not know that the dominion bureau of statistics can break down figures in that way for the groups suggested. However I will suggest it.
Then, hon. members have talked a great deal about the pyramiding effect of a sales tax like this at the manufacturer's level. I cannot help feeling that there is an implication that all the retailers and businessmen are taking shameful advantage of the consumers -which I do not believe. I would like to hear some of the retailers in the house, people with practical knowledge, state whether or not they pyramid the tax or whether their markup is the cost of doing business. There again, we know that with different items there are different markups. One of the closest markups is in clothing and one of the largest markups, as two hon. members over there should know, is in household appliances. The application of the two per cent increase in the sales tax at the manufacturer's level manifests itself in a different way if there is a ten per cent markup, as in clothing, or a 50 or 100 per cent markup, as in furniture and household appliances.


Charles Edward Johnston: Mr. Chairman, I think the parliamentary assistant is going to have a rather difficult time in convincing the people that this extra tax is not going to materially

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raise prices. The people who buy these things are going to be the best judges. A while ago somebody said that the ratepayers of the country had voted in the Liberal government. I have not much sympathy with those people who would put in a government like this. I would say that all those who voted Liberal deserve just what they are getting.
A while ago the parliamentary assistant said that the reason they did not increase the tax on liquor was that it had reached the point of diminishing return. I think almost everyone in this house will agree that that tax should have been increased instead of the tax on some other things. The parliamentary assistant said also that they did not want to encroach upon provincial jurisdiction. I think both these reasons are exceedingly wrong.
In the first place the federal government is already taxing liquor so there would be no question of their getting into that business -they are already in it. It is just a matter of degree, a matter of how much further they want to go with a tax on liquor. Apart from its use for medicinal purposes, if there ever was a luxury, the use of liquor is one. I think it is safe to say that with all the taxes that have been put on liquor there has been no sign of a lessened consumption. The provincial governments have used this tax as a successful source of revenue. I am just speaking from memory, but I think Alberta got something like $12 million and there was an increase in consumption. This shows that there is a field here for increased taxation by the federal government.
Then it was said that taxation on liquor had reached the point where it was encouraging bootlegging. That is not a very good argument. The government has increased the tax on tobacco and cigarettes to the point where it has caused a material increase in bootlegging and blackmarketing. Yet you hear no suggestion from the federal government that they are going to eliminate these taxes-I am not suggesting that they should -in order to stop bootlegging. I am just pointing out the impracticability of suggesting that they have reached the point of diminishing return with liquor but not with tobacco and cigarettes. I noticed in the paper the other day that Ontario is having an exceedingly difficult time in curtailing bootlegging and blackmarketing of cigarettes, and only yesterday the papers stated that British Columbia was facing the same problem.
I have not heard of any greater difficulty in the bootlegging of liquor now than there was before. Yet all of a sudden there is this surge

of bootlegging and blackmarketing of cigarettes. I think the argument of the government that they could not raise the tax on liquor because it had reached the point of diminishing return and would increase bootlegging and blackmarketing is not very well founded.
I think the people generally who consume these articles would far rather have the tax increased on them than have an increase on the tax on these other things which enter into the ordinary necessities of life. The idea of taxing washing machines! The parliamentary assistant says that that is the only way they can get revenue. That is not the only reason the Minister of Finance gave when he was giving his speech. If I remember rightly he gave as a reason, first, that they had to get revenue and, second, that they had to save material for use in rearmament and so on.
That reminds me of the last war when they began to raise the price of automobiles. It was said that one reason for doing that was to save material so that it could go into the manufacture of armaments. When we suggested that the proper way to handle it was by rationing the government replied that they could not do that. The same thing applies today. If we need the metal which goes into washing machines, refrigerators and automobiles so urgently for war purposes, the proper thing to do is to ration these articles and treat everybody fairly.
This is not a fair tax because those with large incomes are going to get automobiles, washing machines or refrigerators when they want them. An extra $50 or $60 on a washing machine or a refrigerator, or another $200, $300, $400 or $500 on an automobile will not amount to a row of beans to those in the higher income brackets. But it is of material importance to the housewife who needs a new washing machine. Perhaps the parliamentary assistant knows of cases, but I never heard of a housewife buying a new electric washing machine if she did not need it pretty badly.
We are told that there is to be no tax on those that are operated by hand. I doubt if any of them are being made, although there may be one or two. The country is becoming electrified so rapidly that only electrical machines are used. If not electrical, then the gasoline machine is purchased. I do not think anyone would suggest that a farm wife will buy a washing machine as a luxury.
One thing that has amused me all down through the years that I have been here since 1935 is that I have heard it said repeatedly that the fairest tax was the income tax. I do

not think I have heard anyone say this session that the income tax was not the fairest tax. If that is so, and I believe it is, we should look to that field, and in saying this I am bearing in mind what the parliamentary assistant said a moment ago about discouraging production and all that sort of thing.
The very fact that the exemption on income tax is set at $2,000 for married persons indicates that we consider that everyone having an income of less than $2,000 is not in position to pay income tax and maintain a decent standard of living. With the present runaway inflation that $2,000 will not buy $2,000 worth of goods, it will buy only a little over one-half. The parliamentary assistant pointed out that this tax was to raise money. If that is so, why try to get blood out of a stone, why try to get money out of those people who are less able to pay income tax? The exemptions from that tax clearly indicate the position. When you look over the income tax field you find that the greatest amount of revenue is obtained from those people with incomes between $3,000 and $8,000. Certainly everyone will recognize the fact that nowadays an income of $3,000 does not keep a family in a position where they can live in luxury.


Louis-René Beaudoin: Order. I heard the hon. member discussing income tax.


Charles Edward Johnston: I am speaking directly about the excise tax.


Louis-René Beaudoin: The hon. member will realize that this matter was ruled out of order a moment ago. May I at this point impress upon all hon. members that standing order 58, section 2, reads:
Speeches in committee of the whole house must be strictly relevant to the item or clause under consideration.
The words "strictly relevant" might be interpreted in different ways, but may I again call the attention of hon. members to citation 489, for instance, of Beauchesne, third edition, which reads as follows:
In committee of supply, on the 22nd May, 1931,-


Charles Edward Johnston: We cannot hear you, Mr. Chairman.


Louis-René Beaudoin: I am reading citation 489 of Beauchesne, third edition, as an illustration of what was meant at that time by strictly relevant to the item under discussion. The citation reads:
In committee of supply, on the 22nd May, 1931, while a resolution was in discussion for an expenditure of $6 million for construction and betterments of Hudson Bay Railway and Terminals, a member was ruled out of order by the chairman for discussing the question of railway branches to the
80709-156J
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Pacific coast by a Peace river outlet. The chairman based his ruling on standing order 58. section 2, which says that "speeches in committee of the whole must be strictly relevant to the item or clause under consideration." An appeal was taken to the house but the ruling was confirmed on division.
I think a certain amount of latitude is always permissible. When a matter as complicated as the one comprised in this over-all resolution is before the house, I can understand how difficult it may be for whoever takes the floor to confine his remarks strictly to the discussion of the resolution as a whole, but I will ask the hon. member to co-operate with the chair. I know that is what he wants to do. I am not addressing my remarks only to him but to all hon. members and I ask them to confine their remarks-


John Horne Blackmore: We cannot hear what you say.


Louis-René Beaudoin: I hope it will be possible for the acoustics of the house to be improved because, at the moment, I am speaking with sufficient volume that I should be heard at the end of the chamber. If the hon. member cannot hear me now I am very sorry. What I am saying is that all hon. members should co-operate as much as possible in order to expedite the business, and should confine their remarks to the resolution under consideration.


Stanley Howard Knowles: Mr. Chairman, for the benefit of the committee, in view of the fact you have drawn our attention to standing order 58, section 2, which reads: "Speeches in committee of the whole house must be strictly relevant to the item or clause under consideration", will Your Honour tell us what specific item or clause is under consideration?


Alphonse Fournier: Excise.


An hon. Member:: The Excise Tax Act.


Louis-René Beaudoin: When I say "item or clause" as referred to in the standing order, the hon. member will realize that what is meant by that is not necessarily a clause merely of two lines. As a matter of fact the item before the committee now is a resolution of eight paragraphs. That is what is before the committee.


Stanley Howard Knowles: Isn't it absurd?


Louis-René Beaudoin: That is what is meant by the standing order.


John Horne Blackmore: May I draw Your Honour's attention to the fact once more that the item we are discussing is expediency?


Alphonse Fournier: That has been ruled on.


John Horne Blackmore: May I read what we are discussing?


Louis-René Beaudoin: Order.

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John Horne Blackmore: "That it is expedient"-


Louis-René Beaudoin: Order. The hon. member has drawn this matter to my attention before. It is true that this resolution, and all resolutions, start with the wording "that it is expedient to introduce a measure", but what are before the committee are the subject matters of the whole resolution. These are that the rate of the general sales tax be increased, that the tax on candy and so on be reduced, and so on. These are the subject matters which are now before the committee.


John Horne Blackmore: Mr. Chairman, I am sorry not to bow to your ruling but this is a rather important matter. May I read-


Some hon. Members:: Order.


John Horne Blackmore: The steam roller, is it? Let me read what the dictionary says with regard to "expedient". The definition is "advantageous", "suitable", "as to do whatever is expedient", "is expedient", "it is expedient that he should go". Now, Mr. Chairman, when you come to discuss expediency with reference to all these items which are listed you have a field as wide as the whole economy of Canada. I just cannot see it in any other light. I have no desire to spread the whole discussion out too far, but certainly I do not see how in the world you can limit any reasonable discussion on this item of expediency.


Louis-René Beaudoin: I want to thank the hon. member for his kind remarks. I should like to point out to him, however, that the resolution starts with the word "resolved". If some hon. member should decide that what we are now discussing is the word "resolved", proceed to indicate what the word "resolved" means, go into all the details of resolving into something, then deal with the word "expedient", and then with what the word "measure" could' mean, we would cover a great deal of territory, and would not have time to discuss the various details of the resolution. I want to study the remarks made by the hon. member for some other occasion, but at the moment I think that the hon. member will be satisfied with the ruling I have made, and which will apply from now on.


Gordon Graydon: On a point of order, Mr. Chairman, I should like to have a ruling on one matter. Does the chairman not make any distinction between a resolution and the clauses in that resolution? He has already ruled by the citation he has read that the discussion should be limited to the clause in
[The Deputy Chairman.]
question. I cannot see how he can make a valid ruling when he takes all the clauses, puts them in one resolution and says that is a clause.


Louis-René Beaudoin: The hon. member was not in the house this afternoon when the matter was discussed as to whether or not the paragraphs of the resolution were to be discussed separately or as a whole. The decision was made by the house that they were to be discussed as a whole. Therefore what is now before the committee is not eight items or eight clauses. It is one resolution with eight paragraphs. Therefore there is only one item so far as the committee is concerned, and that is the whole resolution.


Gordon Graydon: Mr. Chairman, the problem that has been raised was raised by yourself in the citation that you read. I was here and voted this afternoon, contrary to what the chairman said, but he has now said that the discussion must be confined to clauses which of course is entirely contrary to what the vote this afternoon decided.


Louis-René Beaudoin: The hon. member will understand it must be strictly confined to the clause or item.


Gordon Graydon: But you did not say "item" until now.


Louis-René Beaudoin: I said "item" and I read the rule. Some other hon. member has also read the rule. The rule says-and I am going to repeat it:
Speeches In committee of the whole house must be strictly relevant to the clause or item under consideration.
The item before the committee now is the excise tax resolution.


Donald MacInnis: I accepted what happened here this afternoon-


Some hon. Members:: Order.


Louis-René Beaudoin: Order.


Donald MacInnis: I am raising a point of
order. We have got into such a tangle over procedure that we really do not know where we are. I could take a group of unlearned and inexperienced people anywhere who could carry on a meeting in better form than this. I point out to you, sir, that we are not discussing one resolution. Read the resolution as it appears on page 5:
Resolved, that it is expedient to introduce a measure to amend the Excise Tax Act and to provide-
Then it goes on to set out paragraphs 1, 2, 3, 4 and so on. Each of these is a separate resolution and should be dealt with as such. However, we have decided not to do that, so we had better go on and take them together.


Solon Earl Low: I think I heard you say a moment ago, Mr. Chairman, that you would like to study a little more carefully what was said by the hon. member for Lethbridge.


Mr. Rinfrel:: On another occasion.


Solon Earl Low: And perhaps on this occasion
as well. I am sure the chairman of the committee is well qualified to look over everything that has been said this evening on this matter of procedure without any help from the Postmaster General. I would like to point out, however, that we are at the resolution stage of the bill. On any resolution preceding a bill or series of bills the thing discussed is the principle involved in the introduction of the bill or series of bills. What we are discussing, therefore, is the principle of the introduction of bills or measures to give effect to the budget proposals. Whether or not it is expedient to bring those in at this time is the principle we are discussing; and I contend that the hon. member for Lethbridge is interpreting the point correctly when he says that the whole principle turns on the word "expedient". That is why we are discussing it. If that were not the principle why have any discussion at all? The question is whether it is wise to introduce measures of this kind into the economy of this country. We are taking the position that it is not expedient; that is, it is not wise or necessary. I contend that if you look over the whole matter as it has been presented to you this evening you will be in a position to render a wise decision.


Louis-René Beaudoin: From some of the remarks made this evening a certain theory arises which I should like to look into more carefully before giving my own opinion. The hon. member for Vancouver East, however, suggested that we might make better progress if we were to reconsider our decision and study this resolution seriatim instead of as a whole. Of course the committee is the master of its own procedure. Though it came to a certain decision on this point at five o'clock this afternoon it is always open to this committee to reconsider its position and the manner in which it wishes to study a certain resolution, at a later time even the same day. I am in the hands of the committee, but if it should be considered in the light of the discussion we have had for the last two hours that it would be preferable to study this resolution paragraph by paragraph, I am quite willing to hear opinions on the subject.


Charles Edward Johnston: We are taking longer to
discuss matters of procedure than to discuss the resolution itself. I could not hear clearly
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what you said at all times, Mr. Chairman, but I did notice you reading something out of the rule book. I thought in the vote we had a while ago we decided to throw out all the rules and be subject to the steam roller of the government.
It amazes me how this government gets around things. Whenever they get in a tight spot they always seem able to extricate themselves. I could not help noticing the satisfaction on the faces of both the Minister of Finance and the parliamentary assistant when, in discussing these taxes, they came to the reduction from 30 per cent to 15 per cent in the tax on candy. Of course they did not go on to show the house how this was going to reduce the price of candy, and actually it has not.


An hon. Member:: It has.


Charles Edward Johnston: It certainly has not. Go up to the parliamentary restaurant and buy some candy; you will see whether prices have come down.


An hon. Member:: Ten cents a pound.


Charles Edward Johnston: Why, the chocolate bars were so small already that you could hardly find them in the package. Then they went on to point out that they had taken the tax off cigarette papers, and wasn't that a concession. This thing would be laughable; it would be all right for those on the other side to laugh at the suggestions coming from this side, if it were not such a tragic affair for those who have to exist on meagre incomes. They will have to bear the brunt of the jesting in this house. It is all very well for the Liberal government to say that maybe next year they will be able to alleviate the situation; it is no laughing matter to those trying to eke out an existence on an old age pension of $40 a month, or those on fixed incomes. Or take those who have jobs and are getting perhaps $125, $135 or $150 a month. As the hon. member for Battle River says, a good many of them are getting less than $100 a month. This tax means a great deal to these people.


John Horne Blackmore: It is a weeping matter to them.


Charles Edward Johnston: I often think one of the
best remedies would be to compel members of parliament to live on the incomes these people have to live on, if it were possible to do that. Then it would not require any argument in this house to convince the government that they should go easy on these taxes, particularly as they apply to those in the low and middle income brackets. I am not suggesting that those in the higher income brackets should not pay more in

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income tax. I think they should, and I would agree to an increase in the rate of income tax to take the burden off those who must buy the items listed under the Excise Tax Act. But the government has decided not to do that. The only thing I can hope is that when the opportunity presents itself the people will give their answer in the only way at their disposal.


Gordon Knapman Fraser: It does not matter how you take this resolution, whether you take it as one or whether you take it item by item; it is pretty hard to take, especially this two per cent increase in the sales tax. They sweeten it up a bit by a reduction in the tax on candy and chocolate bars, but I notice that according to the last item they have to give a little free medicine with it. By that paragraph the sales tax is removed from cortisone and ACTH. I should like to ask the parliamentary assistant whether combination coal and gas or combination coal and electric stoves are taxed. I have some other questions to ask, so he can make a note of them and answer them all at once. What was the total amount raised by the sales tax on cigarettes during 1950? What is the estimated revenue from the sales tax on cigarettes for 1951? What was the total excise tax, apart from sales tax, derived from cigarettes in 1950? What is the estimated revenue from the excise tax on cigarettes for 1951? What will the revenue be from the increased sales tax on cigarettes? What will the total tax be, including sales and excise, under the new rate on a package of twenty cigarettes and a package of twenty-five cigarettes?


George Alexander Cruickshank: Mr. Chairman, I believe this is the time for me-


Gordon Knapman Fraser: Mr. Chairman, I should like to get the answers to those questions.


George Alexander Cruickshank: While the parliamentary assistant is looking them up, I am going to talk.


Gordon Knapman Fraser: I think I should have the answers first.


James Sinclair: I am in the chairman's hands, but it has not been the practice to answer everyone as soon as he asks a question. I would be on my feet half the time. I have taken a note of the things about which other members have asked, and I try to answer three or four at a time. So far as combination stoves are concerned, as I explained to the hon. member for Montmagny-L'Islet this afternoon, combinations will be taxed in the same way as they were during the war, on the combination content. If the stove is fifty per cent electrical and fifty per cent

coal and wood, then the tax will be assessed on that fifty per cent, and that will be spelled out in the bill.
So far as the sales tax is concerned, as I explained a little earlier, the sales tax records are not kept separately by items. The sales tax is levied1 on all goods, except those mentioned in schedule III, and there is no sorting out. The excise taxes are separated into the different categories, and we do keep records. So far as cigars, cigarettes and tobacco are concerned, last year the excise tax on cigars was $2 [DOT] 7 million; on cigarettes, $69 [DOT] 4 million, on tobacco, $11-2 million; on raw leaf tobacco, $108,000.


Gordon Knapman Fraser: Now, that is the excise tax?


James Sinclair: That is the excise.


Gordon Knapman Fraser: All right, what about the sales tax?


James Sinclair: As I explained a little earlier, we do not keep separate categories for the sales tax.


Gordon Knapman Fraser: I know, but the minister's department would have a record of the sales tax from the different manufacturing companies.


James Sinclair: The sales tax is reported by the tobacco companies, and is lumped together; the sales tax on cigarettes, cigars, cut plug and smoking tobacco is a single item. There is no division. We could ascertain from the national revenue records the amount of sales tax paid by each of the tobacco manufacturers. Actually, in the Excise Tax Act, there are these separate categories of taxation on cigars, cigarettes and tobacco.
So far as the last question is concerned, the excise tax and duties now imposed on a package of twenty cigarettes amount to 23 cents.


Gordon Knapman Fraser: That is at the present time?


James Sinclair: Under the new rate.


Gordon Knapman Fraser: Then, on top of that there would be the sales tax?


James Sinclair: The sales tax is on the manufacturers' cost and would not be on the retail selling price.


George Alexander Cruickshank: Mr. Chairman, I am glad I have not gone to the Queen city before, because I have learned how to carry on next Tuesday. Apparently, you can talk for forty minutes on expediency, and I shall remember that next Tuesday.


John Horne Blackmore: I am glad I taught it to you.


George Alexander Cruickshank: I am glad that Alberta has at last come to the fore, and will help me.


John Horne Blackmore: I shall be glad to answer your insinuation if you will put it plainly.


George Alexander Cruickshank: You help me on the pipe lines next Tuesday, and I will help you on expediency tonight. I should like to ask the parliamentary assistant what tax has been collected on margarine since it has been legalized, I shall not say purified, but legalized within Canada? What is the estimated total revenue from margarine during the current fiscal year? Will the parliamentary assistant look up for me-I do not expect him to have all the answers right before him even if he does come from British Columbia -what revenue is going to be gained in total from the increased taxation on cigarettes, including this twenty-five per cent increase in the sales tax? Will he also give me the estimate of the revenue lost if they had increased the liquor tax. I have heard.-of course, I might be accused of being wrong and of making irresponsible statements-that we would lose revenue because we would lose our sales to the bootleggers. I have had no experience, Mr. Chairman, with bootleggers, but I should, like to know what authority there is for the statement that we would lose. Certainly the experience of the western province in which we have fishermen, loggers and workmen does not bear that out. There, a tax on liquor which would equal the cigarette tax has never proven to diminish the sales. Wherever good money is made-and in the province of British Columbia we pay the highest wages-I defy the parliamentary assistant to substantiate his claim in that connection. I do not think it is correct. I am not going to enter this argument about the tax on refrigerators, stoves, and so on, but I do not believe I can justify to the people of my riding the increased tax on cigarettes without an increased tax on liquor.
Mr. Chairman, I am not a reformer. My province probably has the poorest liquor laws of any province in Canada. I believe it is a sad day, however, when we have to admit that the reason we are not going to tax liquor is because of the diminishing revenue. I was not in favour of another resolution before this house to have sweepstakes, but if we have to depend upon liquor for our revenue I see no reason why we should not have sweepstakes in Canada. I am delighted to see that attention is being paid to Premier Frost. I believe he is the premier of Ontario. If my memory serves me well, the same attention was not paid to previous premiers in that province. Apparently it is because Premier Frost does not agree with a tax on liquor that we must not tax liquor. Well, Premier Frost had. better try to run his province as the province of British Columbia
Excise Tax Act
is run. As I understand it, there are two provinces that demand this. No, I am wrong about that. I must correct myself. That is a hidden tax that Ontario and Saskatchewan want, as I understand it. The one is a socialist province and the other is a capitalist province of Canada. I understand they want this hidden tax.
I shall have to watch myself or I shall be called to order. If I am called to order, it will be the first time. I do not want to be called to order. I am speaking to expediency now. I just want to go on record definitely as being opposed to the policy of no increased tax on liquor. I do not think the parliamentary assistant has as yet given any reasonable explanation as to why liquor should not be taxed to as great an extent as are cigarettes. Mr. Chairman, may I say that I heard the most charming member we have in this house defending cosmetics. Even if she comes from Hamilton, I think I know as much about cosmetics as she does. I have tasted all the different brands there are. I enjoy it, even in Winnipeg. But I am not going to speak any more with regard to this matter.
As I said, I am going away tonight. I am giving hon. members fair warning, and I hope they have good luck tomorrow night between eight o'clock and nine o'clock when I am not here. I may say that I attended to that matter before 1 left.
How the government can possibly expect the people of Canada to accept this policy, I do not know, when the only argument they can use is that Premier Frost favours it. Premier Frost must be extremely flattered. I hope he is waiting to meet me tomorrow morning. He must have been extremely flattered to know that just because he wants this liquor money, we are obliged to increase the sales tax by 25 per cent. If they would tax liquor as it should be taxed-and not this 300 per cent that the parliamentary assistant is talking about-and if they would regulate their liquor laws, I do not think he needs to worry for one minute about the people running to moonshine. I will admit that possibly the parliamentary assistant, not having had the experience of living in the province of British Columbia as long as I have, is not familiar with the situation. But the time when moonshine-


George James McIlraith: He will get old soon enough.


James Sinclair: I am getting old.


George James McIlraith: The parliamentary assistant is just like the hon. member in that respect.


George Alexander Cruickshank: If he has to live in Ottawa too long, or as long as some other

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parliamentary assistants, no doubt he will. The time when this moonshine liquor became such a great detriment to what you may call legitimate liquor, as even the boys over in the ivory tower will know if they know anything about it, was when rationing was in force-when people were allowed a 12-ounce bottle of liquor a month, and that is all. That is when moonshine was in its heyday. Any man who knows anything about loggers, and I want to apologize to the loggers for mentioning them, or anyone who knows anything about the purchase of liquor when high wages are available to all, knows that that is the time when bootlegging and moonshine came on, and that it was not on account of high taxes.
I have had the privilege of travelling in possibly as many countries of this world as any of these gentlemen who prepared this budget, but there was this difference between us. Most of the travelling I did was at my own expense and not at that of somebody else. I therefore know something about conditions. If a man wants a bottle of liquor, he is going to buy it, and he is going to pay the tax. When conditions are as favourable and people are as prosperous as they are now, it is all poppycock to tell me that they are going to cut down the consumption of liquor because we put on a reasonable tax. Mind you, there is no increase in the tax at all. I do not believe it would be practical, unless you want to prohibit the consumption of liquor, to put a tax of 300 per cent on it or to put such a tax oni anything else. But as yet no justification or satisfactory explanation has been given for the failure to increase the tax on liquor. As I say, I am not going to go into the matter of frigidaires, but there are certain items, subject to this 25 per cent increase in tax, which nobody can say are not necessities of life in this day and age.
I do not have to stage any filibuster on expediency tonight, so I shall not take up any more time. But I want to state definitely, Mr. Chairman, why I voted for the budget as of course I did. It was a vote of confidence in this government; and I happen to be a supporter of this government. It is also a matter of expediency. When I look over at the opposite side, how could I possibly do anything else but vote confidence in this budget, as a matter of expediency? But I am not going to try to justify to my riding the fact that no increased tax was put on liquor, as a result of any of the arguments put forth so far in defence of that policy, when at the same time there is this terrific increase in the tax on cigarettes. Cigarettes are the

only thing that might possibly be classed more or less as a luxury. Liquor definitely is a luxury.


James Sinclair: The hon. member is going to miss his train if he does not watch out.


George Alexander Cruickshank: The parliamentary assistant would be sorry if I did, would he not? May I say that there is a difference between being dumb and being stupid. There is a big difference.


An hon. Member:: Which are you?


James Sinclair: I am both.


George Alexander Cruickshank: One of my parliamentary assistants says "are you an expert?" Another of my parliamentary assistants says, "both". In order that the matter may be clarified and may be clear to all, I will tell you the difference between being dumb and being stupid. It is a simple matter. If you are dumb and are highly educated, you are stupid. That is the difference.
I will not take up any more time. I know that I cannot change this policy at all. But I wanted my views to be definitely on record. I have not the time tonight, but if I had I would not have Webster, as hon. members opposite have. I would have had Oxford before me, because there is something so responsible and so typical of the definition that I have given that springs from Oxford, that I should like to have had my-what is the word I am trying to find? I have not my Oxford here so I cannot refer to the particular word I want.
In all seriousness, Mr. Chairman, I want to say that I do not think it is anything for the people of Canada to be proud of to say that we, with all the resources we have, with the one and only tax that is fair to all, namely the income tax, cannot make the necessary provision for financing and that we have to do as is being done, for two reasons, namely, because we are afraid that the moonshiner and the bootlegger will flourish or that Premier Frost cannot finance the province that the people of the rest of Canada have carried on their backs ever since confederation.


Mr. Hees:: Mr. Chairman, I agree one hundred per cent with what has been said by the hon. member for Fraser Valley. I find it exceedingly hard to understand the explanation made by the parliamentary assistant for not imposing a tax on alcoholic spirits. It seems to be based on an idea that the tax on liquor has reached the point of diminishing return, and that idea seems to be based on a statement made by Premier Frost with regard to the situation in Ontario.

If that is the case, there must be in Ontario some indication that the consumption of liquor or the sale of liquor has been diminished by the latest tax that was applied to it, namely, the one imposed last September. I think that the parliamentary assistant to the Minister of Finance, on investigation, will find that not only did the sale of liquor in Ontario not decrease since the imposition of the last tax in September, 1950, but that it has actually gone up since that time. I can see no indication at all that the tax return from the sale of alcoholic spirits has reached the point of diminishing return. I can see no reason why that tax should not be applied. I would like to hear a fuller explanation from the parliamentary assistant as to how the Department of Finance has arrived at the conclusion that the tax that can be obtained from alcoholic spirits has reached the point of diminishing return.


James Sinclair: I cannot do more than repeat what has been said by the Minister of Finance in this respect. Our tax on liquor is a tax which has never been cut back. During the war it was the first tax to be increased, and increased sharply. In the period since the war we have not cut back the tax on alcoholic liquor at all. The first tax we hit in the baby budget last fall was the tax on liquor, followed by that on corporations. The baby budget was the first of our defence budgets.
The breakdown I put on the record last week gives hon. members some idea of the rate of taxation on liquor. When a bottle of liquor which is sold by a distiller for $1.10- and that includes the profit, and the cost of operation of the plant, and the land tax, and all the ordinary local taxes faced by any manufacturer-retails for $4.25 across the country, bearing in mind the combination of the federal tax and the amount put on by the provincial liquor control board, you have some idea of the very heavy present taxation on liquor.
The fact that Premier Frost made that statement before the budget was brought down serves to confirm the fact that the Department of National Revenue had come to the conclusion that we were getting pretty close to the limit, in terms of taxation on liquor as related to other taxes. Of course that is always the relationship we must keep in mind. The question of the enforcement of the law was one brought up, not just by Premier Frost, but on other occasions by other provincial leaders.
I think some hon. members are confusing the situation as it applies to cigarettes and
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to liquor. The manufacture of liquor is a comparatively simple operation. When there is too great a disparity between the actual cost of manufacture and the sale price, there is a natural incentive for illegal manufacture. On the other hand there is not the same opportunity for the illegal manufacture of cigarettes. The problem we have to contend with in that instance is the one of smuggling from the United States.
In view of the fact that liquor taxes have never been cut back, were the first to be increased last fall, and the fact that it is the belief of the Department of National Revenue that we were reaching the limit of taxation, so far as revenue from liquor was concerned-even without confirmation from Premier Frost in the Ontario legislature- we decided not to raise the liquor tax at this session.
Then, the hon. member for Fraser Valley referred to margarine. I would say that margarine is one of the few food products we tax. There is a ten per cent sales tax on margarine. Then, the other questions I had anticipated he would ask, the duties on imported edible oils, I shall deal with when we come to the customs tariff item.
The hon. member asked for information showing the revenue produced by the increase in the taxation on cigarettes and tobacco. On cigarettes, in a full year, the increase will add $26 million of revenue, and in the fiscal year 1951-52, $21 million. As hon. members know, receipts lag behind the period on which the tax is imposed. Then, on tobacco in a full year it will be $17 million, and this year $14 million.


George Alexander Cruickshank: I have another question.


Louis-René Beaudoin: The hon. member for Rosetown-Biggar.


Major James William Coldwell: I have listened with a good deal of interest to the statement by the parliamentary assistant that liquor is now bearing a tax sufficiently high. I say to him and to the committee that, in my opinion, if the tax on liquor is high, then the sales tax on the necessities of life, so far as the great masses of the people are concerned1, is more oppressive than any tax on liquor could possibly be.
I think the hon. member for Fraser Valley is quite right when he -says that those who wish to drink liquor will buy it, no matter what the cost. I believe that was clearly demonstrated during the war, as to some extent he pointed out. I remember being in Edmonton and being told that those who came

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in on a Saturday night from the Alaska highway, and wanted to buy a bottle of liquor, were prepared to pay bellboys as high as $40 for a bottle of it.
Consequently I do not follow the argument made by the parliamentary assistant or the minister. Indeed, I would read a description of another budget, which I think would be of interest, and which objects to the increase in the high cost of living:
Meanwhile, the profiteers escape, the excess profits tax is reduced. No attempt is made to tax the huge fortunes accumulated during the war, and every year it will become more difficult to make an inventory of such fortunes and compel them to contribute to the public revenue. By passing the conscription law parliament declared that every man's life was at the service of the state. Surely if that is right, it is even more certain that every man's fortune should be at the service of the state. Still more is it true that the state should have the right to take at least a share of fortunes accumulated by men out of the very necessities of war, by men who were safe and comfortable at home while young Canadians were suffering and dying in the trenches. The government lets these accumulators of fortunes go free, while it taxes the veteran on his clothing and his boots.
Who said that? Well, here it is-"The Liberal Point of View," June, 1920. And the budget? The Drayton budget of that year. These are current comments on the proceedings of the parliamentary session of 1920, put out by the national Liberal committee, 115 Sparks street, Ottawa; Hon. W. L. Mackenzie King, M.P., Liberal leader.


Julian Harcourt Ferguson: Would you mind reading
that over again?


Major James William Coldwell: No, I shall not read it over again.


Julian Harcourt Ferguson: I am afraid they did not
hear it.


Major James William Coldwell: They can read it in Hansard tomorrow. It just serves to reinforce the point of view some of us on this side of the house have been expressing in regard to this matter. The budget we are now discussing is a negation of everything the Liberal party preached in the days before 1935. I wish to say, Mr. Chairman, that I think a short time ago you made a very useful suggestion, which the government did not accept, when you proposed that we should take up these budget resolutions clause by clause, instead of dealing with them as we have been doing tonight.
As the hon. member for Vancouver East has pointed out, the manner in which this has been discussed would discredit a meeting of people who had no idea whatsoever of parliamentary procedure. Here we are in the parliament of Canada, with the rules of debate set out in various volumes on the table and in our desks-and we get nowhere.

I think we should try to do, what it was decided this afternoon, in fact, that we would not do, and that is to discuss the proposals now before us, point by point, rather than run all over the lot. Let us decide each thing as we go along; otherwise I am sure we shall get no further tonight than we have gone at the present time.


Heber Harold Hatfield: I want to protest against the sales tax, and the tax on necessities such as stoves and refrigerators, and other appliances required in an apartment house. I would point out to the parliamentary assistant that last year New Brunswick imposed a provincial sales tax of four per cent and the increase in the dominion sales tax will bring that other tax up to about six per cent. With the wholesaler and retailer markups on the four per cent tax, the retail price of many necessities of life is up about 20 to 25 per cent, in some cases up to 50 per cent. There are tremendous markups, both wholesale and retail, on articles such as drugs.
The parliamentary assistant talked about a bottle of liquor costing the store about $1.10, whereas the consumer had to pay $4 for the same bottle. That is a tremendous profit. Let the provincial governments reduce their profits. A few years ago we thought it was an awful thing for a government to be selling liquor, and I do not think they should today. The four per cent provincial sales tax in New Brunswick brought in a revenue last year of $7,500,000. This increase in the federal sales tax will increase that tax on the people of New Brunswick and I want to protest against it.


Julian Harcourt Ferguson: Mr. Chairman, to increase the cost of refrigerators and articles of that kind to the purchaser by increasing the sales tax is in my opinion nothing less than scandalous. The extravagant spending by this government reminds me of a true story I heard some years ago. Two prospectors discovered one of the first producing mines in the Kirkland Lake district. They were brothers and I am sure that any mining men in the house will recognize these men when they hear the story. They sold out their interest to an English syndicate, each man receiving around $200,000. As these brothers admitted to me years later, they were not used to money and they squandered it quite quickly. Each of them bought a Cadillac car; one built a race track near Niagara Falls while the other tried to farm up in the frozen north.
One day the two brothers and another prospector, a co-discoverer of the mine, were proceeding down the main highway from Kirkland Lake in one of the Cadillacs.

The car was well oiled and, according to the brothers, all the men in the car were well oiled. They approached an old farmer carrying two buckets of water. As the Cadillac approached he stood dumbfounded at the side of the road and just as they passed him he threw up the buckets of water and said, "Go to it, you fools".
When I think of the extravagant spending of this government I am reminded of that story of the two prospectors who had so much money that they did not know what to do with it. Unfortunately in the last two elections the people of Canada have been something like this farmer. They have simply thrown up the buckets of water and said, "Go to it". But the day is coming when the farmers and all the voters of Canada will not just throw up buckets of water, they will mark their ballots as a token of the fact that they realize that this government is building houses that are costing hundreds of thousands of dollars too much and is squandering the people's money and actually depriving the public of refrigerators.
I think of the young married man who cannot afford to buy a house and who must move into an apartment. If this man had a home in the country he might have a hole in the ground where he could keep his food from decaying or rotting, but apartment dwellers must of necessity have refrigerators which must be supplied by themselves or by the owner. You cannot run out to the backyard of an apartment and (pick up kindling and some firewood. It is not likely they are living over a coal mine like the people in Edmonton, and the result is they must buy electric stoves and electric refrigerators.
Undoubtedly the parliamentary assistant will take all the credit, if there is any credit due, for the raising of these large sums of money which will be necessary if we come to an all-out war. The former minister of finance certainly took all the credit for the financial brains he had behind him, for all the theatrical people and the moving picture celebrities who helped, for the greatest advertising agencies in the world which put on a campaign to raise money for the war. Yet one great almighty man, the minister of finance of that time, stuck out his chest and said, "Look, I did it all with my little hatchet".
The other night the parliamentary assistant made a speech and he waved a piece of paper around trying to explain why his department did this or did that. I believe he certainly would like to take all the credit in the world,
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if there is any credit due to the government. In my opinion there is not very much credit due.
The government says that they cannot tax liquor. A few moments ago an hon. member mentioned that people had paid bootleggers up to $40 per bottle, and during prohibition days in New York were willing to pay $25. In Toronto, in the King Edward hotel or the Royal York hotel, you find people paying $8, $10 and $15 a bottle. When the legal places of sale and the cocktail bars close, people who want liquor go out and buy it from bootleggers and are ready to absorb the increased price. I believe the man who wants liquor will be prepared to pay a higher price at the legal places of sale. I believe the people who want cigarettes are paying the increased taxation right here in Ottawa.
I think every effort should have been made to keep down the cost of essentials to the home owners and to the home seekers. A fraction of a cent or one or two cents on cigarettes is not a great deal to the individual, but when it is all lumped together a tremendous burden is placed on the people of Canada by this excessive sales tax. There are people who do not want to debauch themselves with liquor or who smoke with moderation, and yet they are having to pay much more for essentials. Liquor is not an essential, it is a luxury.
I cannot conceive how the parliamentary assistant can stand up in this House of Commons and say that they have fully considered the question of increasing the tax on liquor, and yet they placed increased taxes on refrigerators and other essentials. The two things just do not go together. The parliamentary assistant may flourish a piece of paper in the air, but no matter how much he may try to explain what the government has done, I do not think he can successfully explain it to the people of Canada. I am positive that at the next election the voters of Canada will assert themselves in no uncertain terms. They will show that their eyes have now been opened and they will no longer throw up two buckets of water. They will mark their ballots accordingly to express their disapproval of this government.


Louis-René Beaudoin: Order. It has just been brought to my attention that this afternoon an amendment was moved by the hon. member for Winnipeg North Centre suggesting the imposition of an additional tax on liquor. That amendment has been disposed of. Therefore no similar amendment can be

Excise Tax Act moved again, and I do not think it is in order to discuss the question of the imposition of a liquor tax again.


Wilbert Ross Thatcher: Mr. Chairman, I think I
could make quite a case for the retailer tonight but I am afraid it might fall on deaf ears.


James Sinclair: Oh no.


Wilbert Ross Thatcher: Therefore I will not make my plea in that direction. There is one thing about this debate that I have rather enjoyed today. Usually the parliamentary assistant has been able to rush his measures through with great rapidity. He has been very capable in doing that. I remember him giving me advice some years ago. He said: You know, if you want to play rough you will get played rough with. I think the parliamentary assistant has had that experience today. He started out to do a pretty fair job this afternoon, and then he tried to get a little rough with my friends to the right of me. I think they have reciprocated in kind this evening by holding up this resolution.
Be that as it may, everybody will agree that the excise taxes on refrigerators, washing machines and stoves are unfortunate. I suppose we need revenue for the war. Nevertheless it seems strange to me that taxes should be imposed on these items and not on oil burners, for instance. It would seem to me that oil burners and coal stokers can be classed as luxuries much more than stoves, refrigerators and washing machines. I do not know whether hon. members realize just what the effect of this tax is going to be. It means that today on these three items we have first of all an excise tax of 15 per cent, and then a sales tax of 10 per cent on top of the excise tax.


James Sinclair: No, no, the same base.


Wilbert Ross Thatcher: Then in four provinces I
believe we have a provincial tax of 3 or 4 per cent, and on top of that in some cities there is a city tax. That is going to mean that altogether there will be a tax of roughly 30 per cent. I want to tell the house that these taxes are coming at a particularly inopportune time because in the past year the prices of these items have gone up anywhere from 15 to 20 per cent.


An hon. Member:: Why?


Wilbert Ross Thatcher: 
Louis-René Beaudoin: Shall the resolution carry?


Stanley Howard Knowles: Mr. Chairman, you are an optimist. I should like to say a word about a point which the hon. member for Lake Centre put to the parliamentary assistant in the form of a set of questions. My hope is that the parliamentary assistant will look into that phase of the matter and give us a little more explicit answer on a later occasion. The hon. member for Lake Centre raised the question as to how much the cost of living of an average family-he defined an average family as a family having an income of less than $3,000 a year-would be affected by the increased taxes set out in the Excise Tax Act resolution now before us. I think the parliamentary assistant had difficulty understanding the question at first. When he did get it he was not sure that his department would be able to provide the information.
May I point out, as has been indicated previously in this debate, that before we had the budget debate the house was engaged in a debate on the cost of living. It was suggested to us by the government that debate was inopportune at that time, that we should wait for the budget, that the budget would deal with the problem. That seems to me to suggest that before taxes of this kind were imposed the government should have considered their effect on the cost of living. Maybe the government is prepared to defend that effect, but at least they should have been prepared to tell us what the effect is. The hon. member for Lake Centre referred to the average family as being a family with something less than $3,000 a year. I am afraid the average family in my constituency has considerably less than that to live on during a year.
I	do know that the cost of living index is worked out on the basis of what has happened to the cost of a basket of goods and services which in the base period of 1935-
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39 cost $1,453 a year. As the parliamentary assistant knows, at that time the bureau of statistics took a certain basket of goods and services which added up to that figure. Now they ascertain what those same goods and services cost at today's prices.
This means that each increase of $14.53 per year in the cost of living of an average family means an increase of one point in the cost of living index. The 'hon. member for Lake Centre did some rough figuring of his own before he spoke tonight, and said he thought the taxes set out in this act would cost the average family around $39 a year. That is the sort of figure I think the Department of Finance should have obtained before it imposed these taxes. If it did not, then it should now obtain it and tell us what the figure is before we vote on this resolution. If the hon. member for Lake Centre is correct and that figure is around $39 a year, or we will say $40 dr $45 a year, right there you have the basis for an increase of three points in the cost of living index. It may take a little time for that increase to be reflected in the index issued by the bureau of statistics, but it will be felt by our people right away. If the parliamentary assistant is not able to deal with that phase of the matter tonight I hope he will go into it very fully before we get back to this resolution on another occasion. I have not had a chance to look at the table he said he put on Hansard today. Certainly I will look at it when we get Hansard tomorrow, but I doubt if that table answers the kind of question put by the hon. member for Lake Centre, and which I am putting in a slightly different form now.
Another comment I wanted to make about the sales tax, which is covered in one paragraph of this resolution, is that it seems to me the parliamentary assistant let the cat out of the bag this afternoon. When complaints about this tax were being made from this side of the house the parliamentary assistant pointed out, as I remember his figures, that there were in Canada some
5.200.000	wage earners, of whom only
2.200.000	pay income tax. His point, and in fact I think he said it quite clearly, was that we need a tax of this kind so that other group of 3,000,000 wage earners would be taxed to help pay the cost of such social services as family allowances and old age pensions.
I	wish to draw to the attention of the government two points which respect to that admission by the parliamentary assistant this afternoon. On the one hand it is an admission that these taxes will be borne heavily by people in the lower brackets. The Minister

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of Finance tried to make a great deal, during the course of his budget speech, out of the argument that because so many things did not bear the sales tax the people in the lower brackets pay that tax on only a limited percentage of the goods they buy. Well, the parliamentary assistant cannot have it both ways. He cannot say on the one hand that the poor people do not have to pay this tax, and on the other hand that they are applying the tax so the people who do not pay income tax will pay their share of the cost of social services such as old age pensions and family allowances. The fact is that they do have to pay it.
The other point I wish to make is that it seems to me this is practising deception. The government makes a great deal out of the fact that it has certain exemptions with regard to the income tax below which people do not have to pay that tax. I say they would be far better off if there were no sales tax whatsoever, even if the exemptions were lowered, so people would be taxed according to their ability to pay instead of being taxed at these high levels on the necessities of life without regard to their ability to pay. I submit that it is practising deception to say these people are exempt from the payment of income tax and then turn around1 and impose taxes upon them in this way, which the parliamentary assistant said; today was the purpose of this sales tax.
I do not like jumping around in this resolution from paragraph 1 to paragraph 4 to paragraph 7, and so on.


Douglas Charles Abbott: Why not jump around You are easy to follow.


Stanley Howard Knowles: I do not like it because, as was said here earlier this evening, I cannot imagine any group of people in the back woods, getting together for the first time to hold a little meeting, who would discuss their affairs with less attention to parliamentary procedure than this house is showing tonight. Any group of people who got together to discuss a proposition which had eight major sections, three of which were divided into subsections, even if they had never heard of May, or Beauchesne, or Bourinot, or any of the rest of them, would have decided on the basis of common sense to discuss that proposition paragraph by paragraph.


James MacKerras Macdonnell: But they
would not be afraid of a vote on the sales tax.


Stanley Howard Knowles: I think the hon. member for Greenwood is right on the beam there.


Douglas Charles Abbott: My friend can vote against it when the bill is brought in.


Stanley Howard Knowles: The whole point is that the government does not like to have votes on these individual clauses even when, as was the case this afternoon, they can win those votes. Of course this whole absurd practice began back in 1948, when on one occasion they were caught short in the house and lost a vote. However, since this committee has decided by a majority vote to do things in the most absurd way possible I have no option but to obey the will of the committee and jump all over the place.
Now I am going to jump down to resolution No. 4. I want to register my protest, along with others who have spoken today, against this tax being imposed on such basic-necessities as electric stoves, electric washing machines, and electric refrigerators. I hope the parliamentary assistant enjoyed reading the editorial in this evening's Ottawa Journal, in which he is referred to as Grandfather Sinclair. If he has read the editorial I am sure he blushed at the picture it painted of him when it said that while he is still a young man he would like to suggest to the young people of today that they start life not with the things regarded today as necessities but with the limited conveniences our grandparents had a generation or two ago. Surely if it is the aim of the government to cut down the purchase of things that have a steel content it would have been far better to do it on a rationing basis rather than on the basis of imposing these increased taxes, which have the effect of increasing prices as the hon. member for Moose Jaw has just indicated. On another occasion, as a matter of fact, I will introduce another amendment to this omnibus eight point resolution. My amendment will deal with this paragraph 4. It seems to me that an alternative might be suggested which would be much better than trying to raise $16 million in this way.
Now, Mr. Chairman, I shall just take a moment longer. In keeping with the absurd procedure we are following today, let me jump down to No. 7. This is one that we all welcome. As a matter of fact, one of the reasons that we wanted to follow the sensible practice of taking this resolution up one item at a time is so that we could vote unanimously for some of the ones of which we approve, and at the same time register our opposition to the ones to which we object. With respect to No. 7, I am sure we all welcome the repeal of the sales tax on cortisone and ACTH.


William Duncan McKay Wylie: What is the other word?


Stanley Howard Knowles: You will find it spelled out in full in the resolution. Can the parliamentary assistant tell us what the situation is with respect to drugs generally? What

drugs are free from the sales tax, and what drugs or medicines are still subject to the sales tax? A reference was made earlier this evening to the effect of the sales tax on municipalities, and one member who was discussing that matter referred to the fact that hospitals' should get some relief from this tax. I was under the impression there was some relief for hospitals, but would the parliamentary assistant spell it out, particularly with respect to drugs and medicines, and also the situation with respect to hospitals?
_ Mr. Macdonnell (Greenwood): Before the ^ parliamentary assistant answers that, could I ask him to deal with one other thing in connection with item No. 7? It is represented to me that there is another drug called prostigmine, which is a specific remedy for myasthenia gravis. I am informed by competent medical opinion that this drug is somewhat of the same character as these others and is a remedy for a terrible, obscure and otherwise incurable disease. It is very expensive and I am hoping possibly it may be entitled to consideration the same as these other two.


James Sinclair: I can assure the hon. member that it will certainly be given consideration. In matters like this, of course, the department must be largely guided by the advice of the Department of National Health and Welfare.
So far as the question asked by the member for Winnipeg North Centre is concerned, I would point out that schedule III of the Excise Tax Act shows the exemptions from sales tax, and the various drugs and hospital equipment, artificial eyes, limbs and parts thereof are listed. I will put it on Hansard if that is desired, but is it the practice to repeat in Hansard the things that are in statutes?


Stanley Howard Knowles: What I would like to know is, does the word "drugs" in the way the parliamentary assistant has used it include all drugs and medicines or even a substantial group of medicines?


James Sinclair: It mentions specific medicines and drugs-insulin, radium, which is not a drug, liver extract used exclusively in the treatment of anaemia; articles and materials for the sole use of any bona fide hospital certified to be such by the Department of National Health and Welfare, when purchased in good faith for the use of the said hospital and not for resale.


William Scottie Bryce: Is penicillin still taxed?


James Sinclair: Penicillin has the sales tax on it.


Wilbert Ross Thatcher: Can the parliamentary
assistant state whether a capital gains tax
Excise Tax Act
has been considered in lieu of this particular one we Eire discussing? It seems to me that might bear on the people who could afford it in a little easier manner. If a capital gains tax has been considered, what are the reasons which made the government decide it would not be advisable at this time?


James Sinclair: Naturally, in raising this extra money, every possible avenue of taxation was carefully explored by the budget committee. The United States has a capital gains tax, in the administration of which they have encountered certain problems. In view of their experience and our own system of taxation, it was not thought practical to introduce such a system. We have always regarded the best tax as being a tax on income rather than a tax on capital.
As I pointed out earlier, our whole tax policy is along the lines of the British system rather than the United States system. The British have not got a capital gains tax, although one year they had the income tax rate so high in the upper brackets that in some instances they actually took more in taxes than the person had in income. That was done only once, so far as I know.


Wilbert Ross Thatcher: The main reason being cited against it is the fact that it did not work in the United States?


James Sinclair: No, that was one of the reasons. The tax was very carefully considered. It seems to be a popular form of tax to advocate, especially with people who have no capital themselves. Actually, the effect on expansion and improvement of industry in a young and growing country is a matter, considering not only that we are taking 50-6 per cent of the profits and taking them as was pointed out in cash payable immediately, that had to be carefully considered. It did not seem to fit in with our tax program.
While I am on my feet may I express my own regret that when the hon. member was speaking he did not state his views on the charges that have been made by the leader of the C.C.F. that the sales tax is pyramided by people who are retailers. In view of his experience, I am sure he could have been very helpful to us in that respect.


Major James William Coldwell: Does the hon. gentleman deny that sales tax is pyramided?


James Sinclair: We had a very long discussion-


Major James William Coldwell: I was very moderate in my estimate.


James Sinclair: We had a very long discussion on this point in the budget debate last year.

Excise Tax Act
I	put the position which I believe is taken by most businessmen in this country, that the markup put on by a wholesaler for his cost of doing business or a retailer for his cost of doing business is not a rule of thumb percentage just slapped on. I suggest that neither the leader of the C.C.F. nor I have had any experience whatever in the actual technique of applying that. It was for that reason I was anxious to hear from the hon. member for Moose Jaw what the actual practice is, whether it is as I think it is that the retailer's markup has a relation to his cost of doing business and is not a rule of thumb thing which he puts on the price to him of the goods, which price includes sales tax. I think we would be very happy, since our knowledge is academic, to have heard from someone with practical experience.


Major James William Coldwell: It is rather unusual to ask individual members of the house to give information which should be forthcoming from the officials of the house.


Douglas Charles Abbott: On business practice.


Major James William Coldwell: I think the minister, and his assistant should be able to answer questions of that description as well as any other. Mr. Chairman, it is eleven o'clock.
Resolution stands.
Progress reported.



BUSINESS OF THE HOUSE

Alphonse Fournier: In preparing the outline for tomorrow I had to proceed by a process of elimination. I had in mind that we should take up the estimates of agriculture, but that was not acceptable. I wanted to proceed with the gold bill, but that did' not meet with the general wish; neither did the consumers' credit bill. I had to drop the resolution concerning the Judges Act, and the Aeronautics Act. I now have a very limited field. I hope that what I announce will have unanimous approval. Tomorrow we will try to complete the study of the estimates of the Department of Transport. Then there is on the order paper Bill No. 196, respecting the Hamilton harbour commissioners. I know that the hon. member for Hamilton West (Mrs. Fairclough) is anxious to have this bill amended. Then we have the resolution in the name of the Minister of Finance (Mr. Abbott) concerning the Veterans Business and Professional Loans Act. I understand that is to include in the benefits of that act more veterans than those that now have them. Then there is Bill No. 198, to amend the Customs Act.


Arza Clair Casselman: Is there not anything else on the order paper?


Alphonse Fournier: Oh, yes; but I could not ask hon. members to agree that we should bring those things up tomorrow.


Major James William Coldwell: I was just going to say this, Mr. Speaker. I do not usually make a suggestion of this sort, but we are faced with this situation.


Alphonse Fournier: Suggestions are always welcome.


Major James William Coldwell: There are some 150 members who are going to Toronto tomorrow. A small number of us will be left here. It seems to me that some consideration might be given to closing at six o'clock tomorrow instead of going on until eleven.


Some hon. Members:: No.


Major James William Coldwell: What I am thinking of is the fact that there will be so few of us here, inasmuch as there are others who will be going home for the week end. Only a few of us will be left here. I do not think it is fair to those who are left that we should have the responsibility of dealing with these matters; and I do not think it is fair to those who are going away tomorrow to do something which may be of interest not only to them but to the country, that they should be deprived of the opportunity of dealing with these matters. I am just making that suggestion.


Alphonse Fournier: I will make no promise or threat. I shall be guided by the progress we make tomorrow.


Arza Clair Casselman: Is that not a threat?


Alphonse Fournier: To myself. If we make progress, and by progress I mean if we complete the transport estimates-and we have had four sittings on them now-


Arza Clair Casselman: Two long and two short.


Stanley Howard Knowles: That sounds like a rural telephone number.


Alphonse Fournier: And if we complete this small bill and the resolution, so that we can bring in this help to veterans, at six o'clock I certainly would consider that suggestion made by the leader of the C.C.F.


Major James William Coldwell: That is quite a large task.


[Stage Direction]
It being five minutes after eleven o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]
Friday, April 27, 1951